What Your Contract With Your Home Builder Should Have

Building a new home is a big job that requires a lot of paperwork, a lot of money, and a lot of responsibility. This responsibility falls not only on you, but also on the contractor that you hire to do it for you. Having a contract written up by your lawyer or signing a contract that the contractor hands to you is always a big issue and you need to make sure that you understand everything in it before signing it or any other document. Contracts are designed to protect the signers from each other in the event of a dispute or in the event that one person tries to cheat the other for any reason.

A contractor that you hire may ask whether you want a “time and materials” contract or a fixed price contract. Even though the time and materials contract might sound appealing, since it means that the contractor will charge you a percentage of the overall cost of the building materials needed to finish the job, this can be a real booby trap. Unforeseen issues and building costs can hold up a job and create a slow leak or a flood of funds coming out of your wallet before you realize what has happened. It can also take longer to finish the home than you first thought that it would. A times and materials contract puts it on you to make up for the change in the cost of materials. Having a fixed-price contract will protect your pocketbook from these time and budget increases.

Anything that you expect the contractor to do should be in the contract. This means that you need to include the dates that the project will last, as in when it will begin and an approximate date as to when it will be finished. There should be a list of materials needed to build the home and approximately what they will cost. You should also consider having in the contract the right to settle a dispute by arbitration, since this will cost significantly less than having to go through a court proceeding should there be any problems between you and the contractor.

You should also obtain a warranty on the contractor’s work that will last for at least a year on the materials and labor. Sometimes a state will require a warranty on the contractor’s work for the period of at least five years.

A payment schedule should also be specified and you should never pay cash. Do not let the payments get ahead of the amount of work done. If work stops, stop paying until it resumes.

Jim Corkern is a writer and promoter of quality
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