What to Look For in a Home Renovation Contract
- By Jeremy Thompson
- 02 Jun, 2016
A well written home renovation contract is thorough, and explains exactly what is to be done and how. The contract should also explain potential risks and issues and how they will be handled. Failure to read and understand the contract offers you as a homeowner no protection, but understanding your home renovation contract and making […]
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Scope of Work
The scope of work is a detailed outline of what the job entails. A renovation contract should include project descriptions along with the materials and quantities required, including product model, color, size and brand. And it’s helpful if the contract explains the timeline of when each part of the project should occur so you can ensure the workers are making the expected progress.
The renovation contract should set the estimated start and completion date. It’s not uncommon for delays to occur, some caused by the client or contractor, and some out of either’s control, but it’s important to have an end goal to strive towards and to try to get back on track whenever delays occur.
The Cost (i.e. the Bid) & Payment
The agreement should clearly state prices and be inclusive. Ask if there are any additional fees or costs not included in the contract such as clean-up fees or the cost for temporary power.
The agreement should outline the payment schedule for the contractor, subcontractors and suppliers, and it should include what payment methods are acceptable, and if installment payments are an option. The contract may also include late payment penalties; know what these are in advance.
The contract should clearly state what the contractor will and won’t do, including site clean-up and hauling trash. It’s important to understand who will be responsbile for the site clean-up work. As well it should clearly state who is selecting materials if some materials are to be chosen later and are not included in the original scope of work.
A renovation contract includes an estimate of the cost of materials. But because all costs can’t be completely accurately accounted for during the bidding process, the allowance acts as the budget for particular items, such as the kitchen cabinets. A contractor, through the contract, is allotted a certain budget in choosing such items so that the costs are still accounted for even through the total cost is not yet completely decided.
Renovation contracts should include a process for the contractor to follow if there are changes to the scope of work. A detailed contract should prevent a large amount of changes, but expect a few changes. Because changes are sometimes costly and time consuming, the agreement should clearly state how to handle such changes. (i.e. the homeowner must be notified and give consent first).
The renovation contract should include information about any warranties which cover the material and work performed. It should include details of the names and contact information of who is covering the warranty, including contractors and manufacturers. The warranty period and any limitations should also be clearly explained.
Because of the risks involved in construction, a renovation contract should contain information about insurance. If a contractor does not have adequate insurance, you may be held liable. Even if the contractor carries liability insurance (to cover harm caused by construction to non-workers and property), as well as worker’s compensation (to cover injury to workers), you may want to ensure you have builder’s risk or other renovation insurance to cover damage from fire, wind or theft.
Because a renovation contract, once accepted, becomes a legally binding contract, understand the terms and conditions completely before signing. This ensures both your and your contractor will face fewer issues during the renovation process.