The key to having a successful project is to have a well-developed contract that doesn’t leave anything out. Everything from the types of materials used to the cleanup of the construction site should be included in the contract. If something goes wrong during any phase of the project, both you and the general contractor should be able to rely on the terms actually specified in the contract.
Make sure your remodeling contract includes the following:
Contact information: The contract needs to include the name of the contractor, address, phone number and license number.
Job description: Spell out the project down to the very last detail and designate who is responsible for what. Don’t automatically assume the contractor understands all of your wishes and desires.
Set a timeline: Set a timeline detailing exactly how long the project will take, including start and end dates. A general contractor should be able to give you a time estimate, and it will be used to determine the contractor’s quote.
Payment terms: Tie payment dates to job completion. Most contractors will ask for a down payment, usually between 20 and 30 percent of the total cost. You should watch out for a contractor who asks for a full payment before starting a job. It’s also a good idea to hold back at least 10 percent of the payment until the job is completed to your satisfaction.
Local authorization: Specify that your contractor is responsible for securing necessary regulatory permits for your project – walk away from a contractor who can’t or won’t approach local licensing or permitting agencies.
Penalties for missed deadlines: Give yourself options to deduct or delay payment if completion dates are missed. Be specific about amounts and clearly define terms.
Set a procedure for changes or additions: Outline a process to follow for project changes or additions. For example, require written sign-off on changes sought by the contractor so you don’t have to accept unauthorized changes. Large-scale projects supervised by a general contractor often uncover hidden problems that must be addressed before work can continue.
Detailed outline of costs and materials: Contractors should provide this in their estimates, but attach the details to your contract. Require an itemized list of materials, labor and any other costs you will incur. If you want the contractor to use a specific brand, it needs to be included in the contract, and you should ask to see receipts.
Proof of licensure, insurance and bonding: Find out what, if any, trade licenses your community requires and don’t hire anyone who fails to meet them. If something goes wrong you may be forfeiting state or local enforcement assistance if you hire someone who isn’t licensed. Ask for proof that a contractor is licensed, bonded and insured to protect you from liability for property or job-related injuries.
Termination clause: Spell out reasons the homeowner or contractor can leave the job without penalty (e.g. if the homeowner doesn’t pay him or her or if the job drags on without reasonable explanation for delay, poor quality work or failure to adequately communicate.)
Other protection: Ask the contractor to provide a lien release, which protects you from liability should the contractor fail to pay his or her subcontractors who worked on your project.