If you are building a home or hiring a contractor to do renovations to your home, here are five of the most important things that you need to do when negotiating your contract with your builder/contractor:

1) Always negotiate a maximum guaranteed price with the contractor. This means placing a limit on the amount of money that you will pay the contractor for all of the work

performed. This is called a maximum guaranteed price. Make sure that your contractor agrees on the maximum guaranteed price in writing. The maximum guaranteed price is the total price the contractor will charge you for all of their services, labor and supplies. Here is some proposed language when you include your maximum guaranteed price in your agreement with your contractor. Contractor understands that owner has established a fixed limit for the total construction costs for the work of $____ dollars which said fixed limit amount represents the not to exceed sum of all of the construction contract cost necessary for completing all of the work required and fully compensating the contractor for all of his fees and reimbursable expenses. Contractor agrees that the guaranteed maximum cost for the project will not exceed said fixed limit. Contractor will be responsible for any fees/expenses that exceed the guaranteed maximum cost.

2) Always insure that your contractor in their written agreement specifically lists all of the work they are promising to finish and includes a guaranteed completion date to ensure that your project is timely completed. We recommend you adding in your written agreement a condition that clearly states that “time is of the essence” in the contract and that the work must be completed within your desired deadline date.

3) Always ensure that your written agreement includes a provision that states that all of the work will be done in a good and workmanlike manner and all materials furnished and used will be new and approved by the owner.

4) Always ensure that it is your contractor’s obligation to obtain all of the necessary building and construction permits and any similar authorizations from any other governmental authorities required under your agreement. It is important that you include this provision in writing and ensure that your written agreement includes a provision that confirms that all permits and authorizations are the contractor’s obligation and that the contractor is responsible for all of the costs of obtaining these permits and authorizations.

5) Always ensure that you obtain a warranty from the contractor that confirms that your contractor warrants all of the labor performed and assures the quality and workmanship of all labor performed.

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