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What is a Renovation Contract?
A renovation contract is a type of home improvement contract that outlines important aspects of a remodeling job in real estate. A construction company or general contractor draws up this type of legal contract to provide specific details about a job and to lay out remedies for problems that could arise when the work is being done.
What’s Included in Renovation Contracts?
An effective renovation contract addresses all the most important aspects of a remodeling job. Construction lawyers help construction businesses create renovation contracts that are clear, concise, and include protections for general contractors and their customers.
Renovation contracts should include several pieces of vital information about a remodeling job:
- Job Description: Detailed information about what type the scope of work being completed should be the first thing included in a renovation contract. This section should also include details about any required materials and any associated costs for them.
- Legal Obligations: Contractors should list information about any licensing requirements, company insurance, permits, or special approvals that apply to the job at hand. Any applicable inspections requirements should also be included in this portion of the renovation contract.
- Payment Details: The expected cost of the remodeling job should be clearly stated in the renovation contract. Particulars about how payments should be made and specifics about any payment plans should also be included.
- Project Dates: The date the project is expected to begin and the ending date. Also, if any delays in the project timeline arise, what steps will be taken to communicate the new information and move forward.
- Changes in Scope of Work: Allowances for a change order must be written into the renovation contract to provide guidance on what to do in the event of a change in the scope of work. Details surrounding how changes will be made and approved belong here.
- Liability Clause: A liability clause places a cap on the damages that a construction company can be demanded to pay in the event something goes wrong on a job.
- Indemnification Clause: An indemnification clause serves to shift liability for any damages off of one party and onto another. A typical indemnification clause in a renovation contract holds construction companies responsible for any damage caused while the work is being done.
- Warranty: If any warranty is offered on the work or materials used on a remodeling job, the details should be included in the renovation contract.
- Signatures: Perhaps the most important part of a renovation contract is the signatures. These certify that all parties are in agreement about the terms of the contract and solidifies the contract as a valid legal document.
See an example of a sample renovation contract here .
Steps to Writing a Renovation Contract
Writing a renovation contract is a job best left up to construction lawyers. These expert individuals craft a contract that includes all the pertinent information while also providing protection for workers and clients. Writing a construction contract is a multi-step process that should not be tackled alone.
With the help of a construction lawyer, follow these steps to craft the perfect renovation contract for your next remodeling job:
Step One: Determine the Scope of Work
A renovation contract is essential to protect all parties when a new remodeling job is embarked upon. The first step in drafting any remodeling contract is determining the scope of work.
Aim to answer the following questions with this portion of the contract:
- What type of work needs to be completed?
- What materials will be needed and how much will they cost?
- What special permissions will be provided (i.e., permits, approvals, inspections)?
- Can a formal bid be attached to the renovation contract?
Step Two: Discuss and Agree Upon Pricing
The final cost of a renovation project is perhaps the most important aspect of the job to many clients. Renovation contracts should definitively state the estimated price of a job. During this step of drafting your renovation contract, you must discuss the client’s budget and come to an agreement about the price of the project.
Keep these questions in mind when discussing pricing with the client:
- What is the client’s budget?
- What types of work and materials can be used to complete the job within the desired budget?
Another important part of this section is how payments will be made and at what frequency. If a payment plan is desired, lay out the terms of the plan in this section. Some other popular forms of payment for renovation jobs are payments based on milestone and payment based on a deposit placed before the job and the final balance paid within a certain amount of time after it is complete.
Here are a few things to consider when discussing payments with the customer:
- Will payment be required up-front or is a payment plan available?
- Which completed milestones should warrant a payment from the client?
- If a payment plan is being used, in what increments will the client need to pay?
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Step Three: Draft A Project Timeline
Constructing a project timeline is a vital part of writing a renovation contract. This is due to the necessity for a project start and end date in the contract. Discuss with the customer the timeline that the requested job requires. Then, decide how much time should be spent on the job in order to please both parties.
Here are a few questions to ask that will help determine a project timeline for your renovation contract:
- How long is the client willing to wait for renovations to be completed?
- How will acquiring necessary materials and tools impact the timeline overall?
- How many working hours per week can be dedicated to completing the renovation contract?
Step Four: Signatures
To seal the legally binding deal, signatures are needed. Once this step is complete, your renovation contract is legally binding and you can get started on the job.
Get more information about how to write a renovation contract here .
Protecting Yourself with a Renovation Contract
The most important job of a renovation contract is to protect the agreeing parties during the scope of work and beyond. A good renovation contract defines specific expectations and gives guidance on what to do if anything goes awry. Renovation contracts also define any promised warranty and in-depth details about what is covered and for how long.
In the event that any legal complaints are brought up against either participating party to a remodeling job, a renovation contract is key to resolving the conflict. This is because a well-written agreement provides plenty of direction regarding what remedies are available for certain disputes.
For more a more in-depth look at how renovation contracts protect contractors and clients, check out this article .
Get Help with a Renovation Contract
Are you ready to learn more about a renovation contract and what it can do for you and your clients? The first step you should take is consulting a professional construction lawyer to guide you through the contract drafting process. Post a project on ContractsCounsel today to get connected with lawyers who specialize in renovation contracts.
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