5 Ways a Written Contract Can Protect Your Interests When You’re Hiring a Company for a Renovation Project
Homeowners across the United States are expected to spend around $485 billion on home renovations in 2024. While spending has been tempered a bit since the COVID-19 pandemic, many homeowners are finding that renovations are a more economical choice than buying a house with the current interest rates and real estate market. Whether you’re adding a bathroom or creating an in-law suite, home renovations are a major money and time investment, and it’s important to ensure that investment is protected by a written contract.
1. Provides a Detailed Description of the Services to Be Provided
Most people who work with home renovation contractors aren’t experts in the field, and this can lead to miscommunications and disappointments down the road. Having a detailed written contract ensures that you have documentation on what services are to be provided and what you can expect from the company. This contract should include the full scope of services, including who will be providing the materials and what the cost will be.
For example, if you hire a contractor to perform a kitchen renovation, you may expect them to do the demo, install the new materials, and dispose of any debris. But if the contract doesn’t specifically state all three of these parts, you could be faced with having to demo the space yourself or pay for a dumpster to haul away the trash at the end of the job — both of which are demands on your time and money that you may not have been prepared for.
It’s crucial to thoroughly read any contract before you sign it to ensure you understand what services you’re paying for. Having a contract attorney review your paperwork before signing can provide even more peace of mind and help you identify any ambiguous wording or terms that could cause problems later on.
2. Outlines When and How Work Will Be Completed and by Whom
Any contract for a home renovation project should include who will be doing the work, including whether the contractor will be using subcontractors, and how long the project is expected to take. If you don’t have a specific timeline in the contract that you can fall back on, you could face extensive delays that can leave you living in a construction zone for much longer than you anticipated. It’s also important to have terms included that explain what happens if a project takes longer than expected to complete and who is responsible for the increase in cost. In some cases, this will fall on to the client, but in others, it should be the contractor’s responsibility.
3. Establishes a Procedure for Change Orders and Dispute Resolution
One of the most important roles a written contract serves in a home renovation is that it details what happens if a change order needs to be made and what the dispute resolution process looks like. It’s common for homeowners to change their minds about a certain detail in the middle of the project. And sometimes, decisions have to be made because the chosen materials are out of stock or something else came up that required a change in the budget. Make sure that it’s clear in your contract what constitutes a change order, how it may impact what you’re paying, and how long the project is expected to take.
Many contracts have clauses that say that the parties are agreeing to arbitration or mediation instead of a lawsuit if there is a dispute. Others might not. Either way, it’s important to understand what recourse you have if the contractor doesn’t fulfill their expected duties.
4. Details Payment Terms
Most contractors operate on a milestone pay basis, which means that they get paid in pieces as they hit certain milestones on the project. Often, a down payment is required to reserve a spot on the contractor’s schedule and to start the project. Once the project is in progress, you may provide payment at specific intervals, such as when the demo is completed and when new kitchen cabinets and flooring are installed. In most cases, the final payment doesn’t happen until the project is completed and the client is satisfied with the work.
Any contract should have detailed payment terms so you know exactly what you’re paying and when. Be wary of contracts that specify that you are to pay the entire amount up-front, as this can force you to file a civil lawsuit to get your money back if the contractor doesn’t complete the project or does a subpar job.
5. Provides a Basis for a Legal Claim If Necessary
The benefit of signing a legally binding contract with a contractor for your home renovations is that it gives you the basis you need for a legal claim if the job isn’t done properly. If the contractor doesn’t complete the project, tries to charge you thousands more at the end, or does a poor job, you have the ability to file a civil lawsuit against the company to get some or all of your money back. However, your legal options depend heavily on what’s included in the contract, which is why it’s crucial to have it reviewed by an attorney before you sign.
Whenever you are dealing with a contractor or other company, it’s crucial to ensure that the terms of the agreement and what services are being provided are in a legally binding contract. If you’ve been burned by a bad contractor or want to learn more about your options for enforcing the terms of a contract, call Resolvere Law PLLC at 480-702-2272. Ask for your consultation to find out what your next steps should be.