Contracts are a necessary component in residential construction. Whether you are building a new home or remodeling an existing one, the contract lays out the rights and responsibilities of all involved parties. Embarking on a construction project without a contract is not only rare, but also unwise.
Legal contracts are necessary because people do not see eye to eye. And where residential construction is concerned, there is plenty of room for disagreements. Almost all disputes in residential construction are the result of assumptions based on contracts that are either ambiguous or do not contain the necessary language to protect one party or the other.
Sparano + Mooney is a Utah architectural firm that specializes in mountain modern design in Park City. They design both vacation homes and primary residences. They say that people looking to build new homes or remodel existing ones should look for some key things in a residential construction contract:
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1. Project Scope
First is the scope of the work to be done. This is not so much an issue for new home construction in that it is pretty obvious what architects and builders are expected to do. But when it comes to remodeling projects, the scope of work is a common area of dispute.
It is important that a contract layout is exactly what is expected of the builder and architect. For example, will the builder handle obtaining the necessary permits and scheduling inspections? No detail is too minor to leave out. Whatever you do, do not assume. Don’t allow the contractor or architect to imply anything, either.
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2. Project Timeline
Residential construction contracts should always include a timeline. In all likelihood, contract language will accommodate delays, but it should also be clear about how any such delays are handled – and what they mean for final completion. Note that a lack of hard and fast deadlines is an open invitation to not getting the job done in a timely manner.
Also remember that delays can be caused by a number of things outside architect and builder control:
- Bad weather and natural disasters
- Labor strikes and subcontractor issues
- Inspection and permit delays.
Such contingencies should be expected. However, they are not licenses for architects and builders to not give your project the attention it deserves.
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3. Fund Disbursement
New home construction generally requires fund disbursement in multiple stages. Contract language should stipulate milestones that would facilitate new disbursements. In terms of remodeling projects, how and when payments are made is open to more negotiation. Whatever is decided on should be clearly spelled out in the contract. This includes any requirement for down payments, itemized estimates, receipt submission, etc.
It is smart to have language compelling the builder or contractor to supply signed lien releases and waivers at the time of final payment. Allowing liens to remain after final payment is made could cause future problems.
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4. Warranty Details
If any warranties are offered by the builder or contractor, they should be stipulated in the construction contract. It is not necessary to detail each aspect of a warranty if a separate warranty document exists. It’s enough that the contract refers to that document. But if no document exists, details should be spelled out in the contract.
Whether you’re working with Sparano + Mooney to build a custom vacation home in Utah or hiring a contractor to remodel your kitchen, do not proceed until you have a signed contract all parties are amenable to. There are too many disputes that arise even when contracts are in place. Imagine the possibilities of embarking on a project without a contract.
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