November 2, 2006  
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Featured Issue: Improve Your Home Improvement Savvy

Be Sure Your Next Remodeling Contract Includes These

You'd be surprised how many of the following fundamentals don't make it into construction contract documents.
  1. Homeowner's Name And Work Site Address. Double-check that the work site address, lot number or other distinguishing legal descriptions, are specified., especially if the job site different from your current, primary or mailing residence.

  2. The contracting company's name and street address and telephone number should appear on the contract or be included in writing, in the body of the text.

  3. Scope of Work. A brief job description that provides a two or three sentence overview of what the project includes is very helpful and important. For example: "Project will include demolition & remodel of existing kitchen; powder room installation beneath entry stairway; construction of an approximately 700-sq.ft. addition/family room to the rear of residence; and roof/siding repair, according to specifications provided by XYZ Architects' plans dated 9-1-02".

  4. Permits and Approvals. Contractor must take responsibility, in writing, for getting any required building permits. Homeowner may need to get express consent and approval from a homeowner association for certain types of work. If so, that should be included in the agreement, as a mutual understanding.

  5. Proofs of Legality. Written statement, or copies of proof that are formally amended to the agreement, indicating that the contractor has a valid construction license, pays worker's compensation, has acquired any necessary bonding and/or has adequate general liability insurance to legally work in the jurisdiction.

  6. Materials List. This should include a statement that, unless otherwise noted, all materials used will be new and of good quality. The Materials List should also itemize, by brand name, model number, grade and/or other distinguishing terms, any materials, appliances, fixtures, cabinetry, tile, paint or other items to be installed. For example: "Jacuzzi, model #, color . . . American Olean 6-inch square quarry tiles, color; 20 Andersen windows, model # . . . American Standard, builder grade bathroom sink fixtures . . ."

  7. Warranties. Two different types of warranties should be mentioned or be amended formally to the agreement: Manufacturer's warranties, and limited warranties for workmanship. Keep in mind�c.some states specify a minimum length of warranty period on workmanship. Check with your state to be certain you don't accidentally sign away some of your legal rights. It's not unheard of for an unscrupulous company to offer you less warranty on workmanship than the state requires.
  8. Liens and Waivers. Be sure to have specified in writing by what means the contractor will protect you against possible liens in the event the general contractor fails to pay the subcontractors or suppliers.

  9. Waiver of Liability. Contractor should state in writing that the company specifically exempts the homeowner from liability for any injury sustained by any employee or subcontractor of the company during the course of the project.

  10. Dispute Resolution. How will the parties handle a dispute they can't resolve quickly and easily? As a point of departure in the event of a stubborn dispute, Smart Consumer Services recommends that the parties hire a mutually agreed-upon mediator, specially trained in alternate dispute resolution (ADR), for which the parties share the cost equally.

  11. Time of Performance. Barring unforeseen site conditions or severe weather, which might reasonably alter time-of-completion estimates, all construction contracts should include a project duration statement, with or without specific start and end dates. If completion must be achieved by a certain date, and the contractor has agreed to that, the deadline must be in writing. Certain penalties may accrue in the event of failure to meet that deadline�c.and certain bonuses might also be awarded for early, successful completion.

  12. Deposit and Milestones of Completion. A solvent, reliable contractor does not require a hefty deposit. It's entirely appropriate for a homeowner to expect to pay little or no deposit. The most fair, logical and trustworthy 'paydown schedule' should spell out, in small increments, exactly what will be accomplished, and how much will be due when that milestone is achieved.

  13. Change Orders and Amendments. Each time a modification to the original agreement is made, regardless how minor, a counter-signed Change Order should be created between the parties, indicating what will deviate from the original plan or assumption, and how much the change will cost. Change orders are legal documents. They should be legally amended to the agreement at the time of the change. Other typical contract amendments include architects' or designers' drawings and materials lists. Each amendment should be identified as Exhibit A, B, C, etc�c.and be mentioned at the end of the document.

  14. Cooling Off Period. The contract should include a statement indicating that the homeowner has three days from the date of signing to withdraw from the agreement without penalty. It should also state clearly that no work will begin on the project until those three days have expired.

An annotated Sample Contract Package, in straightforward language, with all necessary Change Order, Release or Waiver of Lien forms included, is available through Smart Consumer Services.

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