If you are building a home or hiring a contractor to do renovations to your existing home, you have many important decisions to make – including how to negotiate with the builder or contractor.
Consider the following tips when negotiating with a builder/contractor in Ohio:
Always Negotiate a Guaranteed Maximum Cost
When negotiating with your contractor/builder, always insist that the contractor/builder submit a detailed estimate for the total project as when needed for your use in obtaining construction and permanent financing for the project. Such estimates must be as accurate as possible given the then-current status of the preparation of final plans and specifications. When the drawings and specifications have been specifically developed with respect to the work, your contractor/builder must be prepared to produce a guaranteed maximum price or cost no later than thirty days following your request.
Here is some proposed language for a guaranteed maximum price:
Contractor/builder understands that owner has established a fixed limit for total construction cost for the work of _____________ which said fixed limit amount represents the not to exceed sum of all construction contract cost necessary for completion of the work and all of contractor/builder compensation, including fees and reimbursable expenses and contractor/builder agrees that the guaranteed maximum cost for the project will not exceed said fixed limit. Accordingly, contractor/builder will provide input for maximum cost savings to preserve the integrity of said fixed limit and during the construction phase of this agreement will monitor the said guaranteed maximum cost. Contractor/builder will be responsible for any fees/expenses that exceed the guaranteed maximum cost.
It’s also important to add language that, in the event the cost of the work shall be less than the maximum guaranteed price, such shall constitute a savings to the owner. Both Parties understand that the builder/contractor shall not participate in any savings.
Control the Quality of Work
Your agreements should also specify that all materials furnished and used will be new and approved by the owner and must suffice for necessary building inspections otherwise provided for in the plans and specifications. Always ensure that all of the work will be done in a “good and workmanlike manner.”
Time is of the Essence
Ensure in all of your agreements that you state that time is of the essence in the performance of the work. You need to state that the performance of the work must be done within a certain time period and that the home builder/contractor will diligently proceed with the performance of the work and the various stages thereof to completion. He also agrees to perform the work for the project by a scheduled completion date.
Ensure that it will be the builder/contractor’s obligation to obtain all necessary building and other construction permits along with similar authorizations from governmental authorities that may be required to perform its obligations under your agreement. The contractor must agree to comply with all applicable laws, ordinances, regulations and restrictions. Ensure that the builder/contractor will bear all of the costs and that those costs will be considered part of their costs.
Get the Builder’s Assurances
Finally, the builder/contractor needs to ensure the quality and workmanship of all labor performed. Ensure in all of your agreements that the builder/contractor will assure the quality and workmanship of all labor performed.