What a Contract for Remodeling Work Should Include
Last updated December 2021
The contract should include the following information for medium-sized and major projects; but even if your project is small, many of these points also apply. Many companies’ proposals also serve as contracts.
Names, addresses, and phone numbers of customer and company.
The company’s information should include its license number.
Who will do what work.
The contract should specify who will perform various aspects of the job and that the company is solely responsible for managing subcontractors and approving the quality of their work.
Detailed job description.
Either include or refer to the scope of the work, construction documents, and other plans. If you’re hiring an architect or designer to monitor all or part of the project, that relationship should be described.
The description should include a summary of building products and materials: that they’re new; comply with all relevant laws, regulations, and codes; and are covered by applicable manufacturers’ warranties. If you’re supplying some materials, get a detailed list of who is providing what for the entire job. Many agreements also include a requirement that for certain products—millwork, hardware, most finishes—the remodeler must provide samples or even shop drawings for your review and approval before purchasing or fabricating the items.
Price and payment terms.
Get detailed, fixed prices for all elements of the job.
Try to minimize the down payment and maximize the final payment. The more you can withhold until the end, the more leverage you’ll have to make sure the job is done well and according to your agreement.
If a contractor demands a large payment upfront to buy materials or products, you’ve got the wrong contractor. Reputable pros have accounts at their suppliers and at least 30 days to pay. Avoid companies that require an upfront deposit of more than 10 percent.
For most major remodeling jobs, payment is made in stages as chunks of work are completed or before large orders are placed. For example, a contract might require five payments: a 10 percent upfront deposit, a 30 percent payment after demolition and framing; a 30 percent payment after installation of drywall, windows, doors, and sub-flooring; a 20 percent payment after finish work; and a final 10 percent payment after all facets of the job are complete. If you’re financing the work via a home equity loan, most lenders won’t release funds until they know a stage has been completed satisfactorily.
Try to include language in the contract that holds back a percentage of the total price, called a “retainage,” until you’re sure the work was done well. A 10 percent retainage is common for residential remodeling work.
If the company accepts credit cards, consider charging all or parts of your job. If there is a problem, you can dispute the transaction with your credit card issuer.
To protect against an obviously substandard job, include a catchall phrase that the contractor will complete the project in a professional manner and that the work will comply with applicable building codes and regulations.
Warranties and guarantees.
Include explicit references to any warranties and guarantees, including a clause stating that the labor and materials the remodeler provides will be free of defects for a certain period of time after the job is complete, and that repairs or other work to correct flaws will be performed for free. One- or two-year warranties are common, but push for the longest warranty you can get. Also, require that the contractor supply you with information on any manufacturers’ guarantees and warranties.
How you can make changes.
Include provisions for handling unanticipated or unplanned changes—and that you and the contractor will describe the change exactly, agree on a price, and incorporate the change into the overall contract.
Start and completion dates.
Request a firm start date. The completion date probably will be an estimate. To protect your right to cancel the contract in the event of unreasonably long delays, include this phrase: “Starting and completion dates are of the essence of the contract.”
Requirement that work be continuous.
Some contractors start off with a bang and bring a full crew that swarms over the work area—for the first day or two. Then, for all sorts of reasons (mainly juggling other jobs), there may be days with little or no activity onsite. Minimize these delays by specifying who will be on the job and that, weather permitting, work will be continuous.
Lead paint testing and abatement.
The U.S. Environmental Protection Agency (EPA) requires contractors working in pre-1978 homes to be Lead-Safe Certified. Companies can achieve certification by applying to the EPA (or an authorized state agency) and having their workers or supervisors take a course that instructs them on specific work practices to protect the home’s residents and workers from exposure. Even very small projects are covered by the law, which kicks in when more than six square feet of painted surface inside or 20 square feet outside are disturbed by the work.
If your home was built before 1978, insist your contract include this statement: “Contractor and all subcontractors will follow EPA regulations for testing for lead-based paint and, if detected, taking required steps to contain the work area and minimizing the generation of lead-paint dust.”
For large jobs, ask each company if it will secure a performance bond equal to your job’s price. This is an excellent way to get extra protection from losing money paid to an outfit that goes out of business or abandons your job.
Although performance bond requirements are common in contracts with commercial customers, they are rare in contracts with homeowners, and a responsible but small contractor may have difficulty obtaining one. But we think it’s still worth discussing the option with potential contractors.
Requiring a performance bond will add a few percentage points to the price of your job, but that might be a reasonable price to pay for the extra peace of mind. To claim funds, the bonding company may require you to obtain a court judgment against the contractor, but often they’ll just settle with you quickly if you have a sound case.
Indemnification and waiver of customer liability.
Your contract should “hold you harmless” and protect you against claims, costs, and attorney’s fees stemming from the contractor’s work.
Permits and approvals.
The contractor should determine necessary permits, apply and pay for them, and arrange for government inspections, if required. The contractor also should obtain approvals by a homeowners’ association or historic district, if required.
Liens and waivers of liens.
In the remodeling business, liens are a kind of currency. They’re routinely taken out against property owners by subcontractors, building material dealers, even individual laborers to protect against not getting paid.
Add this clause to your contract: “Prior to each payment, contractor must provide homeowner with lien releases covering work to which the payment applies. Each release must state the name of the company or individual making the release; the releasing party’s address, materials, or services supplied; the amount the contractor has paid for these supplies or materials; and the homeowner’s address. It must be signed by the releasing party.”
Get a definition of the workday: when it begins, when it ends. Contractors should agree to clean all debris from the jobsite and leave all appliances and household facilities in good working order at the end of each day (with the exception of those items that are actually part of the project, and they should be noted). Stipulate that loud or otherwise disruptive work be confined to certain hours.
Note that you get to say when the job is over.