Whether you do remodels full-time or are new to the world of construction remodeling, knowing how to create a remodeling contract is a big deal.
If you leave out a critical component, it can cost you dearly.
But how do you know what details you should include?
If you’re wondering how to create the perfect remodeling contract, read on. This guide will cover everything you need to know about remodeling contracts and how to create the best contract for your project.
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When Is a Remodeling Contract Used?
A remodeling contract, also known as a remodeling agreement, is a detailed document used by contractors who provide remodeling services.
Legally, it protects the interests of both the contractor and the customer.
Anyone who works as a remodeling contractor should consider using a remodeling contract.
By doing so, you will be safeguarding your remodeling business.
Why Is it Important for Contractors to Use a Home Remodeling Contract Template?
The short answer is “details.”
Whether you’re remodeling a commercial space or a family residence, it is critical that you record the details of your work in contract form.
Using a remodeling contract template will be beneficial to you, your team, and your client because:
- The details of the job will be clearly outlined.
- All parties will know exactly when payments are due and how they are to be paid.
- The client and the remodeling contractor will understand their individual responsibilities.
What Should a Remodel Contract Include? 8 Top Things to Remember
A remodeling contract should include the following details:
- Name and address of the client
- Scope of work
- License and insurance information
- Description of change orders
- Plan for dispute resolution
- Indemnification clauses
- Lien waivers
- Completion schedule and timeline
- Payment schedule
- Warranty information
- Change orders
#1: Scope of Work
A detailed scope of work is a critical component of any remodeling contract.
The scope of work explains the details of the project, including:
- A summary of the project description
- Project goals and milestones
- Clarification of terms and definitions that will be used throughout the project
- The scope of the project, including technical details
- A listing of the materials that will be used in the project, including brands
- Where the materials for the project will be stored
- A general listing of tasks and when they should be completed, including delivery dates for supplies and completion milestones
- Administration details, including the way in which change orders will be handled, as well as how and when payments will be issued
- Before and after photos
In short, the scope of work in a remodeling contract should identify all aspects related to the project from beginning to end.
#2: License Number, Insurance, and Warranty Information
A remodeling contract template should include a section that covers all related insurance and license details.
This takes care of all the legal aspects just in case something goes awry.
If you or the project owner encounter issues while the project is being completed, you will be able to reference the contract to ensure coverage.
When dealing with warranty information, you will want to devote several paragraphs that specifically state how long clients have to make claims.
Generally, it works best to outline warranties on a case-by-case basis, rather than one-size-fits-all, since no two remodeling projects are the same.
It's also a good idea to include your company's insurance details, so they can be referred to quickly if needed.
#3: Description of Change Orders
It's no secret that remodeling projects are infamous for changes.
You never know what you'll find when you rip out a wall.
Including a description of any change orders on your remodeling contract will save you time in the long run — and help ensure that you get paid for all the work you do.
Be sure that the information on your home remodeling contract template includes:
- The project and contact information
- The dates of the change
- All details of the work
- An updated construction schedule and timeline
- The cost incurred to make the change
- The updated value of the contract
#4: Plan for Dispute Resolution
While it's not something you want to think about, disagreements can happen during a remodeling project. Frequently, the client isn’t experienced with construction projects, and their opinions and emotions can run the gamut.
It's a good idea to have a dispute resolution plan in place, just in case you and your client are unable to come to an agreement during the project.
A mediation clause, stating that you will consult a third party who can help you and your client come to a solution, can help you be prepared should issues arise.
#5: Indemnification Clauses
In a typical contract, indemnification clauses serve to compensate one party for any harm or loss that may arise in connection with the other party's actions or failure to act.
In short, an indemnification clause shifts the liability away from one party and on to the indemnifying party.
The indemnification clause can best be viewed as an extra layer of protection that has your company's best interest in mind.
Since there are various types of indemnification clauses, please consult a lawyer to be certain the clause is set up correctly.
#6: Lien Waivers
Protection. That’s where lien waivers come into play.
A lien waiver serves as proof of payment and means that the client is not liable should the contractor fail to pay any subs working on the project.
Having a lien waiver written into the contract for each and every installment payment can prevent the placing of a lien on the property.
Lien waiver clauses also reassure your clients that you are a reputable contractor.
#7: Completion Schedule and Timeline
While it's not uncommon for completion dates and times to change on a remodeling project, it's important to outline the timeline of the project for reference.
You want to be sure to include the starting and ending dates, so the homeowner knows when to expect you. Be sure to keep them informed, as you go, about any time adjustments.
Be mindful that a variety of events, such as ...
- Personal circumstances with the homeowner; and
- Delays in receiving materials
... can push back milestone and completion dates for a construction project, so it is wise to add enough time to compensate for any unexpected occurrences.
Since your client will be living in the space you are remodeling, a timeline can be a huge help to the homeowner during a remodeling project.
#8: Payment Schedule
Every remodeling contract template should include a payment schedule.
It's critical for remodeling contractors to be clear and upfront about payment terms, particularly with homeowners who are operating on a tight budget.
This section in the contract will outline exactly how and when your team will receive compensation for their services, both during the work and after the project's completion.
The billing method you choose will vary from project to project.
On each project, you can choose the one that works best for you and the client, including:
- Invoicing based on established milestones
- Payment on a percentage basis
- A lump-sum payment
Don't underestimate the importance of a payment schedule.
You want to be paid a fair price, and the homeowner most likely wants to keep the project as inexpensive as possible. A clear payment schedule will keep everyone on the same page.
Where to Find Online Residential Remodeling Contract Templates
You understand the importance of a remodeling contract, but may be wondering where to find a remodeling contract template.
Simple remodeling contract templates can be found in a variety of places, including:
- Online legal tech companies; and
- Construction software companies
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