Remodeling Your Home: How A Construction Contract Can Protect Your Rights

While there may be certain implied warranties of quality that exist for work done on home remodeling projects, the relationship between a home or property owner and a contractor hired for a remodeling project is largely determined by the contract that the two parties create. A remodeling contract should establish the obligations that the owner and the contractor each have, and specify exactly what the scope of the work and its limitations are for the project. While it is always best to have a construction lawyer draft and review such contracts, it is useful for both homeowners and contractors to understand the essential terms that remodeling contracts should contain.

Drafting a Remodeling Contract

When drafting a contract for remodeling work, the contract should be in writing so that there is clear evidence of the terms of the agreement between owner and contractor. A written contract will provide invaluable information in the event of a dispute and can help a court to determine both if a breach occurred and what the potential damages are resulting from the breach. To be enforceable, contracts must be negotiated and each party must offer something to the other. In the case of construction contracts, this is generally a promise of payment made by the owner in exchange for work performed by the builder or contractor.

Necessary Information In a Remodeling Home Contract

A remodeling contract should specify a number of different things, including the scope of the project and who is responsible for costs that may arise during the project. For instance, many unforeseen problems can arise during a remodeling project, from the discovery of an unstable foundation to the discovery of faulty electrical wiring. A contractor who does not went to be left paying for these unexpected costs must be certain to include details about what he will pay for and what the homeowner is responsible for paying for.

The homeowner should also be made aware of what work the contractor is willing to do and of what the final outcome of the project will be. It is common to include some type of design drawings, such as computer assisted drawings (CAD drawings) or architectural renderings as part of the contract so that it can be determined if the project has been substantially completed. When no drawings of the projected finished project are included, it becomes even more essential that the contract include a detailed description of the work to be done.

In order to ensure that this work is competed in a timely manner, a deadline for completion should also be included in the contract that allows for reasonable delays. Typically, this clause will include a date that substantial completion is required by, such as a statement that the project will be at least 75 percent done by a specified time in the future. The contract may also make clear that any unforeseen delays necessitating an extension must be approved by the owner.

The materials used in a remodeling project can also have a major impact on the finished results and on the cost of the project. Whenever possible, details should be included in the project about all materials to be used. The contract should outline who is responsible for paying for each of these different materials. In some cases, when an exact cost of materials cannot be determined, a contractor may include allowances in the contract. For instance, a homeowner may be allowed a $1000 allowance for faucets for a new kitchen remodel. If the homeowner exceeds this allowance, the homeowner will be responsible for any extra costs.  The contract should also specify that all work will be done to code and meet certain minimum workmanship standards. If the contractor offers any warranties, these too should be included and detailed in the remodeling contract.

Finally, homeowners must be protected from liens being placed on the home. A lien is a claim that contractors and subcontractors can place on a house or building if they are not paid for work performed. The contract should specify that the homeowner has the authority to withhold payment if liens are placed on the house and that lien releases are required at the time of payment. To ensure protection from subcontractor liens if the contractor doesn’t pay the people he hires to do work on the home, the contract should also make clear that any subcontractors working on the property are not permitted to place liens if the contractor has been paid in full. 

Case Studies: How a Construction Contract Can Protect Your Rights in Home Remodeling

Case Study 1: Clear Scope of Work and Cost Allocation

In this case, Sarah hires a contractor, Mike, to remodel her kitchen. They enter into a written remodeling contract that clearly specifies the scope of the project, including the design drawings and description of work. The contract also outlines the responsibilities for unforeseen costs that may arise during the project. When unexpected plumbing issues are discovered, the contract clearly states that Sarah is responsible for the additional costs associated with fixing the plumbing, ensuring that there are no disputes between Sarah and Mike.

Case Study 2: Deadline for Completion and Extension Clause

John decides to remodel his bathroom and hires a contractor, Lisa. They establish a written contract that includes a deadline for completion, stating that the project should be at least 75% done by a specified future date. The contract also includes a clause allowing for reasonable delays with the owner’s approval. When unforeseen delays occur due to supply chain issues, Lisa seeks John’s approval for an extension, ensuring open communication and avoiding any potential conflicts.

Case Study 3: Material Specifications and Workmanship Standards

Emma plans a major home renovation and hires a contractor, Mark, to handle the project. Their written contract includes detailed specifications of all the materials to be used, ensuring transparency and accountability. The contract specifies who is responsible for paying for each material and emphasizes that all work must meet code requirements and certain minimum workmanship standards. This ensures that Emma receives the quality she expects and protects her from subpar workmanship.

Case Study 4: Protection Against Liens

In this case, James wants to remodel his entire house and hires a contractor, Robert. They establish a written contract that includes provisions protecting James from liens. The contract states that James has the authority to withhold payment if liens are placed on the property and requires lien releases upon payment. It also clarifies that subcontractors cannot place liens if Robert has been paid in full, providing James with peace of mind and avoiding potential legal complications.