📄 Construction Contract

Why You Need a Written Contract

A construction contract is a legally binding agreement between you and your client that defines the scope of work, payment terms, timelines, and responsibilities. Operating without one is like building without blueprints. You're asking for disputes, payment delays, and potential legal problems.

Essential Elements

• Parties: Full legal names and addresses of all parties
• Scope of work: Detailed description of what you'll do (and won't do)
• Payment terms: Total price, deposit amount, progress payments, final payment
• Timeline: Start date, completion date, milestones
• Materials: Who provides what, quality standards, allowances
• Change orders: How changes are requested, priced, and approved
• Warranties: Workmanship and material warranties
• Insurance: Required coverage and certificates
• Dispute resolution: Mediation, arbitration, or litigation process
• Termination: How either party can end the contract

State-Specific Requirements

Many states have specific requirements for construction contracts, including:

• California: Must include license number, notice of lien rights, and specific cancellation language
• New York: Home improvement contracts require specific disclosures
• Florida: Must include notice of right to cancel and lien warning
• Texas: Residential contracts require specific payment and performance disclosures
• Many states: Require notice of pre-existing liens or property encumbrances

Payment Terms Best Practices

• Never front all costs: Get a deposit (typically 10-30%)
• Milestone payments: Tie payments to completed work, not dates
• Retainage: Expect 5-10% held until final completion
• Final payment: Due upon substantial completion, not final punch list
• Late fees: Specify interest rate for overdue payments
• Stop work rights: Reserve right to stop work if payments are late

Change Orders

Changes are inevitable in construction. Your contract should require:

• Written change order requests
• Detailed description of the change
• Price adjustment (up or down)
• Timeline impact
• Signed approval before work begins

Golden rule: No written change order = no extra work.