Believe it or not, there are a ton of home renovations going on right now as we speak where the owner and the contractor have NO CONTRACT !!!! You heard that right. And there are even more where there is a contract in place but it's, well, weak. Over the years and having deal with every flavor of contractor, I have a compiled a checklist of items you absolutely must have in your contract before your next rehab starts. There are other methods I'm sure, but the bulletproof methods have kept my crews happy and out of court.
Days To Completion- Make sure you have a clause in your contract that states exactly how long a contractor has to complete a job. This avoids dragging a job out longer than agreed upon. If you really want to make this case ironclad, charge a daily penalty for each day the contractor takes over the contracted completion date.
Itemized Labor And Material Costs- Each of these items should be itemized and broken down into two separate costs as well as put into an agreed upon draw schedule. As far as labor goes, I advise to set this up into either 3 or four initial draws based upon the length of the project. Make the final labor payment due upon your final walk through and passing final inspection. Set total materials cost up into at least 3 drawings and make sure to include a clause that states that all unused materials are returned to you.
Warranty- A warranty basically guarantees the contractors work against any defects for a said time period. I always put at least 120 days in a contract. This will come in handy when your property finally goes under contract or lease and the buyer / renters inspection is completed. If any of the work that was completed needs to be corrected, the contractor is obliged to fix all problems without cost to you.
Scope Of Work- This should be a separate document that should be an addendum to your contract. Your scope of work should lay out, in detail, room by room, interior and exterior, exactly what work is to be performed on your property, thoroughly. At the end of this document, both you and the contractor should sign so that all work is agreed upon and there are no doubts during your renovation.
These are the main points that I like to address in any contract with a contractor. These items will cover your butt in most situations. Be as detailed as possible in order to minimize your risks on your next renovation. Lastly, no matter how many jobs you do with a contractor, and no matter how comfortable you are with your contractor, ALWAYS have a signed contract before the job begins. JT