Contracts
A Detailed Written Contract Is a Must for Your Protection
A contract is a legally binding agreement between two or more parties. In your case, it is between you and the contractor that you hire to build your outside living space. The contract itself lays out the roles and responsibilities of both parties in relation to your individual project. It is a necessary part of the process so that the interests of both parties are protected.
Be a smart homeowner and work with a professional contractor. They are used to having written contracts that include a detailed project plan which specifies exactly what both parties have agreed to as their part in the construction process. Having that contract is the best way to protect yourself and to make sure that things go as planned. Besides, a contract is a valuable part of what a professional contractor provides.
A contract is also another way to make sure that you know what you are getting yourself into as far as expenses are concerned. Don’t be afraid to ask for a detailed written contract with a contracted price included. That way you will know what to expect and won’t lose sleep over what the final costs will be.
What Kind of Contract Do You Need?
For minor home projects, such as adding steps to a shed, a simple work order may suffice. The work order would include your name and address, the name and address of the company doing the work, a brief description of the work that the contractor is doing for you, the cost of the project and when your payment is due. This shouldn’t be more than a page long.
For larger repairs and building projects such as building a deck, especially those requiring specified materials, you will want additional details. This would include details about the materials to be used which would include brand and product specifications. You wouldn’t want to pay for premium materials only to find out that lower end materials were used. This type of contract would also include details about the contractor’s warranty.
For very complex repairs or remodeling projects, such as a multi-level outdoor living space with a built-in jacuzzi, the contract can get quite long. It will need to include a full set of plans and detailed specifications.
What Makes for A Good Contract?
A good contract provides full disclosure as to what is to be done, how and when it is to be done, how much it is going to cost, how and when the payments will be made and what kind of warranty is provided. As far as your building project is concerned, the contract clearly defines all aspects of the business relationship between you and your builder.
The contractor needs to look out after his interests just as you need to look out after yours. Therefore, a good contract treats both parties fairly, so that both will be satisfied that their needs are being met. You are assured that you will get what you agreed to at the price you agreed upon and on the schedule that was agreed upon. On the other hand, the contractor’s obligations are clearly spelled out; and he has the assurance that he will get paid in full and on time.
It is usually the contractor who provides a copy of the contract after you decide to proceed with using them on your building project and once you have an agreement with them on what is to be done. They will prepare a standard draft copy for you to review. Make sure to review this contract carefully, making sure that it is accurate regarding what you want and what you have agreed to.
In most instances, this contract, written as is, will be adequate to cover the building project. However, you may want to hire a lawyer to review the draft if your project is very complex or requires a large outlay of means.
If there are things on the contract that are not clearly stipulated, if details that you agreed on are missing or if you don’t agree with any part of it, don’t sign it. Since a contract is legally binding once it is signed by both parties, you will want to discuss and resolve whatever issues you find, and the contractor should amend the contract as needed before you sign it.
Changes After the Work Begins
Even though all the plans have been laid out, there may still be necessary changes once the work has begun. Although this is perfectly normal, these changes can be dealt with using well-proven methods.
Change Orders
It is likely that you may want to make changes to the initial contract as the job progresses, especially with larger and more complex projects. You may decide you like something so well that you want to implement it in another area, or you may find materials that you prefer over the ones you originally selected and listed in your contract.
This sort of change is perfectly normal and is handled by a mini-contract called a change order. It defines the changed or additional work as well as the payment terms for the changes to the original contract. These orders need to be signed by both you and the contractor and should include separate payment arrangements based on the work in the change order. Once you have both signed the change order, it becomes part of your contract with your contractor. If you ask the contractor to make a change, be sure that it is properly documented and signed off by both parties.
Contingencies
To manage situations where some aspects of a project cannot be accurately determined until the work is underway, contracts will often set aside a budget “contingency.” This is a certain amount of money that is held in reserve in case it is needed.
An example of this kind of situation is if the subflooring in an old house that you are renovating is rotting and needs replacing. Of course, this can’t be determined until the flooring is removed. To cover such an incident, an estimate of the costs involved should the subflooring need to be replaced would be noted in your contract but subject to your approval during the flooring process. If the subflooring is intact and doesn’t need to be replaced, the contingency would not be approved, and the money would not be spent.
Make sure that a contingency budget is always linked to a specific aspect of the project and that it is also subject to your approval before the money is spent.
Unknown Deficiencies
Where there is the possibility of hidden problems that could not have been reasonably anticipated before the work is underway, your contract will most likely have a clause which states that the agreed-upon price does not cover the hidden issues. Some examples of these problems could include any number of things including dangerous wiring, rotting wood or termite infestation.
If such a problem does arise, the contractor should alert you to the problem and ask for your direction on how to deal with it. He will then determine the cost of the additional work that is needed, and you will have to approve this additional expenditure before he can proceed in remedying the issue. Once you have approved the agreed upon change, it then becomes part of your contract.
