Embarking on a construction project is a significant commitment, both financially and emotionally. One of the most crucial steps in this journey is selecting a contractor and agreeing on the terms of engagement. Often, the contractor will present you with a construction contract or a specification sheet filled with numerous contractual clauses. While these documents are standard in the industry, it’s essential to approach them with a discerning eye. Some clauses, often buried in the fine print, might be more beneficial to the contractor than to you, the client.
Understanding the contractor’s perspective
When disputes arise between homeowners and contractors, the latter often turns to their general terms and conditions to tip the balance in their favor. These conditions are frequently drafted unilaterally, heavily favoring the contractor. Therefore, it’s paramount to scrutinize the contract and its general conditions before putting pen to paper. Remember, the more eager the contractor is to start the project, the more likely they are to agree to remove certain clauses.
Price adjustments
If you’ve agreed on a fixed price with your contractor, be wary of clauses in the initial contract that allow them to hike the construction cost. Such increases might be attributed to rising material costs or labor hours. While it’s understandable that unforeseen circumstances can affect project costs, it’s wise to eliminate such open-ended clauses. Instead, opt for clear terms that specify any conditions under which price adjustments can be made.
Advance payments and interim billings
Check if the contractor demands an upfront payment or plans to send interim invoices. It’s advisable to steer clear of paying an advance. If your contractor goes bankrupt before or during the construction, you stand a chance of losing your money. Also, ensure that if the contractor bills in installments, the amount they’re charging aligns with the value of the work already completed.
Limiting liability
Another critical area to inspect is clauses that limit the contractor’s liability. Assess whether you’re comfortable with these limitations. For instance, remove any clause suggesting that by moving into the house, you’re implicitly accepting the work done. Also, check if the contractor sets a cap on the compensation you might claim from them.
Seeking legal counsel
While it’s essential to be proactive and informed, it’s equally crucial to seek expert advice. Engaging a lawyer who specializes in real estate or construction can provide invaluable insights. They can guide you through the contract, highlighting potential pitfalls and suggesting amendments to ensure your interests are protected.
Conclusion
A construction contract is more than just a piece of paper; it’s a binding agreement that outlines the expectations and responsibilities of both parties. By understanding and negotiating its terms, you can embark on your construction journey with confidence, knowing that your interests are safeguarded. Remember, a fair contract lays the foundation for a successful project and a lasting relationship with your contractor.
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