A well-written contract is the foundation of a successful custom home-building project. It’s more than just paperwork—it’s a roadmap that outlines expectations, protects all parties, and ensures the project runs smoothly. Unfortunately, not all contracts are created equal. Some are vague, incomplete, or fail to address key details, leading to misunderstandings and disputes. To avoid these issues, here’s what every builder should include in their building contracts:
1. Detailed Scope of Work
The contract should clearly define the scope of work, specifying what is included and, just as importantly, what is not included. This ensures there’s no ambiguity about the builder’s responsibilities.
What to look for:
- A breakdown of tasks, such as site preparation, framing, plumbing, electrical, and finishing.
- A list of any exclusions, such as landscaping or outbuildings.
2. Project Timeline
Timelines are critical for managing expectations and planning your move-in date. While delays can happen due to weather or material availability, the contract should provide a realistic construction schedule with key milestones.
What to look for:
- Estimated start and completion dates.
- Milestones for key phases, such as foundation, framing, and finishes.
- Provisions for handling delays and extensions.
3. Payment Terms
The financial structure of the project should be transparent and clearly outlined in the contract. Misunderstandings about payments can strain the builder-client relationship, so clarity is essential.
What to look for:
- A detailed payment schedule tied to project milestones.
- Terms for deposits, progress payments, and final payment.
- Information on how change orders or unexpected costs will be billed.
4. Specifications and Allowances
Custom homes often involve a variety of choices, from materials to finishes. The contract should include detailed specifications for these items and realistic allowances where final decisions haven’t been made.
What to look for:
- A list of materials, fixtures, and finishes, including brands and models.
- Allowances for undecided items, with clear guidance on how overages will be handled.
- Provisions for substitutions if certain materials become unavailable.
5. Change Order Process
Changes are almost inevitable during a custom home build. A well-drafted contract will include a process for handling change orders to avoid confusion and additional costs.
What to look for:
- A formal process for requesting and approving changes.
- A requirement for written change orders signed by both parties.
- How additional costs or timeline adjustments will be managed.
6. Warranty and Workmanship Guarantees
Reputable builders stand behind their work. The contract should include information about warranties and what is covered after the project is complete.
What to look for:
- A clear warranty period for structural components, systems, and finishes.
- Details on how to report issues and request repairs.
- Exclusions or limitations to the warranty.
7. Dispute Resolution
Even with the best planning, disagreements can arise. The contract should outline how disputes will be resolved to avoid costly and time-consuming legal battles.
What to look for:
- A process for mediation or arbitration.
- Provisions for resolving disagreements about costs, timelines, or workmanship.
8. Insurance and Licensing Information
The builder’s contract should provide proof that they are properly licensed and insured to protect you in case of accidents or issues during construction.
What to look for:
- The builder’s licensing details.
- Proof of liability insurance.
9. Termination Clause
Sometimes, projects don’t go as planned. A termination clause protects both parties by outlining the conditions under which the contract can be ended.
What to look for:
- Terms for terminating the contract by either party.
- Financial implications of termination, such as refunding deposits or covering completed work.
10. Signatures
A contract isn’t valid without the signatures of all parties involved. Make sure the document is signed and dated before work begins.
Final Thoughts
A comprehensive building contract is essential for protecting your investment and ensuring a successful custom home-building experience. At Onyx & Oak Homes, we pride ourselves on transparency and attention to detail in every aspect of our projects, starting with our contracts. If you’re planning to build your dream home, let’s talk about how we can make the process smooth, enjoyable, and stress-free.
Contact us today to learn more about our approach to building custom homes!
