General Contractor Contract Tips
Written by Lee Wyatt (last updated February 3, 2021)
Just about everyone has heard some horror story about people hiring a general contractor to perform a simple home improvement project only to enter a scene from the classic movie, "The Money Pit." Unless you are wanting to experience the wonders of having your wallet fleeced, and your room only half finished, then you need to have a carefully constructed contractor contract. That's where these general contractor contract tips come into play.
As you prepare to hire your choice for a general contractor, be sure that you have these tips nearby. As you look through the contract, make sure that each and everyone one of these points is covered. If you find something that isn't covered, be sure to hand it back, and have it added. Once the contract is completed to your satisfaction go ahead and sign it.
- Spell out everything. No matter how silly it may seem, you want to make sure that you have as many things as possible spelled out. This includes your name, the contractor's name, your address, the contractor's address, the work that is going to be completed and so on. These things need to be included so that everyone knows exactly what work needs to be completed, so that there are no surprises encountered by anyone. Keep in mind that a contractor is totally within their rights to charge you more for work that isn't spelled out, so it is always a good idea to have every step of the process spelled out—that way you can't get charged for something that you though should have been included, but wasn't.
- Itemize everything. In your contract, be sure that you have a complete itemized list of all the materials that will be used in your project. Avoid using any words or phrases that imply or say "of equal value." The reason for this is that it leaves a lot of wiggle room for the contractor to pocket the difference between the product you agreed to pay for and something that is of "equal value." However, do not tie the hands of your contractor either. Have clauses in your contract that will allow substitutions to be made, but only with your prior approval.
- Milestones. It is completely fair to have an outline of the milestones for your project to be included in the contract. This will allow you to plan, and expect when certain steps or points of the project should be completed. Around each milestone markers you should also include a payment plan. This way you refrain from paying the complete amount upfront and running the risk of having the contractor run off. In addition, this will also allow you to better budget your project, so you don't necessarily have to have the entire amount of money at one time.
- Penalties. Included in your contract you should also have a section on what I call penalties. What this means is who will be responsible for fixing problems that crop up if the work isn't up to specifications or code. If at all possible, try to also work in a penalty for any late work (i.e., you don't have to pay as much for work that has not been completed on time).
- Double check the contract. Before signing anything, be sure that you double check the contract. If at all possible have your attorney take a look at it to make sure that it is a legally binding contract for your area. You don't want to think you have an iron clad contract, only to find that it isn't valid in your city, county, or state.
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