How to Draw Up a Contract with Contractor

Once you’ve accepted a bid, you and the contractor will draw up a written contract based on that bid. As the working agreement between the two of you, the contract is a very important document – you can refer to it if any differences arise. Therefore it’s important to make the contract as detailed as possible.

Construction materials: The contract should list all materials to be used in construction. It should be thorough detailed, itemizing all materials and fixtures, even things that may seems insignificant, such as drawer pulls and cabinet hinges. If any disagreements arise about materials, you and your contractor can refer to this list of agree-upon specifications. Anything not included in the contract and added later will increase your cost.

Draw Contract with Contractor How to Draw Up a Contract with Contractor

Time Schedule: You and your contractor will include in the contract a time schedule for the project – a beginning date and a completion date. The contractor obviously can’t be responsible for delays caused by strikes or material shortages. You have no effective legal way to enforce a schedule even though it’s written into the contract. Your best leverage is a good working relationship with the contractor – and the stipulation that the final payment will be withheld until the work is completed.

Site preparation and cleanup: Your building site may need to be prepared for construction; fences and shrubs removed, concrete torn up, land graded. If you expect the contractor to do this, you must include it in the contract.

As a job progresses, and once it’s finished, there will be a lot of debris on the site, and disposing of it usually is no easy matter. Again, if you expect the contractor to clean up, it must be in the contract.

Method of payment: Payment, of course, is covered in the contract as well. Usually payment is made in installments as the work progresses, or with an initial payment at the beginning of the project and the balance at the project’s completion. You should withhold the find payment until after the lien period has expired and until final repairs and adjustments have been made. If you have secured outside financing, the financing agency may holy its final payment until the lien period has expired.

Protection against liens: Under the laws of most states, anyone who performs labor or supplies materials for a building can file a lien against the building if he or she is not paid. If the contractor doesn’t settle the claim, the building’s owner may be liable. There are various ways to protected yourself against this eventuality: you can pay suppliers of material and labor directly; you can require evidence of such payment from the contractor before making each progress payment and the final payment; or you can require the contractor to post a bond of sufficient size specifically to protect your property. This bond would be in addition to the one required by the state from a licensed contractor – that minimum bond might not be large enough to convert all claims against a contractor if he or she defaulted.

To be valid, liens must be filed within a specified time after contraction is completed, and the time limit that lien remains in effect is also specified by law. If you are selling your property during period, the settlement of valid liens by payment or legal action will be required before title is transferred.

The laws covering liens vary from state to state, so you should consult an attorney before entering into any contract for work on your property.


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