Does Your Construction Contract Have a Solid Foundation?

The spring construction season is nearly here!  Whether your project plans are small or large, your contract can cause big headaches if you leave out an essential section.  You should always have your contracts reviewed by an attorney, but use this checklist as a guide when you interview contractors or builders to make sure you are working with an honest and ethical professional.

1. The Parties – Make sure you have the correct names of all of the persons entering into the contract.  Check the North Carolina Secretary of States Corporations Division to find out whether your contractor is incorporated, and use the business name listed on their Articles of Incorporation.  If your contractor is not incorporated (or their corporation has been dissolved), use their personal name.  Ask to see their professional license and some form of photo ID to be sure that this person is who they claim to be.
2. Payment –  Be clear about how much your contractor expects to be paid and when he or she will be entitled to payment.  The majority of construction contracts require an initial deposit when the contract is signed followed by a series of installment payments as various benchmarks in the work to be done reach substantial completion.
3. Plans and Specifications – Choose a contractor who is able to provide well drafted plans and specifications.  The level of detail may vary depending on the amount of money invested in the project, but your contractor should be able to describe (or design) his plans and a budget for your home in writing.
4. Change Orders – Because even the best of plans can go wrong or change unexpectedly, your contract must include a provision for changes to your plans or budget.
5. Schedule – How long should your project take?  A few weeks or several months?  The contract should include deadlines for building permits, beginning construction, and when the project will reach substantial completion.
6. Insurance – Without exception, your contractor must maintain a general commercial liability policy and a worker’s compensation policy.  Require proof of insurance before you sign anything, and say farewell immediately to any contractor who balks at this request.