A remodeling contract is the document that guides the entire project. A well written, detailed contract is the first step in a successful project and eliminates miscommunication that can lead to problems down the road.
Remodeling projects are complicated and its often not easy to communicate the exact scope of work or how changes in the work will be handled. Sub Contractors are used on many projects and they also need to understand the exact terms of the project and as the homeowner you should know some basic information about the sub contractors being used.
In this post I am going to outline the 9 basic part we include in each of our remodeling contracts for projects exceeding $2000. Some of the items are required by Florida Law, others are just a good idea to include.
9 Things Every Remodeling Contract Should Have
1. Scope of Work and Design
The remodeling contract starts with a scope of work detailing what is included/ not included in the contract in regards to work to be completed. It should detail specifics of how the work is to be completed, what materials are to be used, where material will be stored, where job site clean up will occur etc…
It should also include floor plans and 3D renderings of the project before and after the proposed work is performed.
2. Itemized Estimate of Costs
The estimate sheet should be very detailed.
- It should list the work to be performed and the specific materials to be used.
- All sub contractor costs should be itemized separately.
- Material Allowances should be itemized separately
- It should be clear what materials are included in the contract and which are not
3. License Number and Insurance
Licensed contractors are required to display their license number on promotional materials or vehicles that contain the company or contractor’s name on it. In addition, all communications between a contractor and an owner must have the contractor’s license number visible on the communication. Communications may include estimates, proposals, contracts, and invoices used in the practice of contracting.
4. Description of Change Orders
With remodeling, often their may be a clause regarding making repairs that were not covered in the original quote. This is fair but the process of how unexpected expenses should be outlined clearly. Change Orders are used to effect changes to the contract. Make sure the change orders must be written and that your signature is required on all change orders over a certain dollar amount before work can be performed.
5. Warranty information
The contract should clearly outline what is warrantied and who is responsible for making the repair (the sub contractor, contractor or supplier etc…)
6. Subcontractor Agreements
Make sure it is outlined in the contact who will pay the subcontractor and when. The contract should also provide the contact information for each sub contractor and their license and insurance information.
7. Payment schedule
The contract should outline when progress payments should be made. A good idea is to set progress payments to be made at the start of specific parts of the job rather than at the conclusion of a part of the job. Its much easier to identify when a new phase of the project has started rather than when it has been completed.
8. Completion Schedule / Timeline
The contract should contain an outline of when the work will be performed including the start and finish date, dates any sub contractors will be on site and the date for any inspections. Of course these dates may change but their should be a clear system outlined that notifies you of any changes quickly and clearly.
9. Clauses Required by Law
Required clauses are outlined in Florida Statutes 489 and include:
- Construction Lien Law Disclosure
- Recovery Fund Disclosure
- Deposit Escrow Notice
- Contractors Right To Repair
- Boilerplate legal info describing arbitration terms, lien law, and right of rescission
Other Common Clauses
- Financing Contingency Clause
- Payment Clauses
- Owner Liability for misinformation
As you can see, if all the appropriate clauses are included a remodeling contract can be quite lengthy. I rarely write contracts that are less the 4 pages and typically they are closer to 10 pages or more.
I also make a point to schedule a meeting with each homeowner to review the contract, rather than just email it to them and expect them to read it all carefully. Its important to thoroughly review the contract and make sure the homeowner understands and agrees with the work outlined in it.
I hope you found this helpful, feel free to contact me with any questions or comments.
Paul McManus, Certified Residential Contractor, lic# CRC1331326