Hiring a Remodeling Contractor
Contract - Page 7

by Leon A. Frechette

It is time to enter into a legal agreement with your contractor and sign a contract for the work to be performed. This contract must, I repeat, must, benefit you as well as the contractor. Your project will run a lot smoother if the contract is clean, concise, and fair.

There are six steps to a contract:

1. Date, name, and address. Carefully review your contract and make sure the date is correct. Check the spelling of your name. If you are married, both your name and your spouse's name should be listed. If the address where the project is to be done differs from the billing address, it also should be listed on the contract.

2. Contents of the project. Here the project is explained completely in writing. The contractor will list the materials, appliances, permits, and labor costs involved. Make sure nothing is left out. Never assume that something will or won’t be done—if you don't understand something in this section, be sure to ask the contractor and, if necessary, have the section rewritten.

3. Completion date. Be sure there are start and finish dates concerning your project and that the allotted amount of time seems reasonable.

4. Payment schedule. The contract must show the amount that you and your contractor agreed upon. There should be a payment schedule set up, with a deposit up front. Generally, the deposit is 25 to 50 percent, but I recommend 35 to 45 percent. Divide the remaining balance into three equal payments: the first payment due at a projected halfway point (50 percent completion) of the job, the second payment due at the two-thirds mark (75 percent completion) and the final payment due three days after project completion.

For example, consider a bathroom remodeling job priced at $3,600. The initial deposit would be 35 percent of the total price, or $1,260, leaving a balance of $2,340. Divide the balance by three for three payments of $780. The first $780 due at the 50 percent completion point, the second $780 due at the 75 percent completion mark, and the third $780 due three days after completion of the project.

Some contractors will have certain phases of the job inspected to coincide with the payment schedule. I recommend that you also inspect your project during these phases. Some of the areas that city, county, or state inspectors will be inspecting are as follows:

First Deposit
  Temporary electrical service
  Footings/foundation

First Payment (50 percent completion)
  Close-in/framing
  Rough-in electrical
  Rough-in plumbing/mechanical (HVAC)

Second Payment (75 percent completion)
  Insulation
  Nailing of wallboard

Third and Final Payment (100 percent completion)
  Checking electrical outlets and fixtures
  Checking plumbing shut-off valves and fixtures
  Checking mechanical (HVAC) and fireplaces
  Checking steps and handrails
  Checking the entire project to make sure everything meets the code before the final inspection report is released.

Hold the final payment until the job has been inspected and you receive a copy of the final inspection report from your contractor.

5. General conditions. Discussed in more detail below.

6. Signature and date. Sign the contract only after you and the contractor have reviewed the General Conditions. Make sure that both you and your contractor sign and date two contracts. Retain one copy for your records; I do not recommend carbon copies.

If you have second thoughts after signing the contract, you have the choice of backing out of the contract, but only if the contract was signed on your property. This comes under your cancellation rights. If you decide to cancel your contract, be sure to contact your contractor within three working days. If you signed the contract at the contractor's place of business, you will not be able to cancel your contract.

The contractor might have the following already typed into the contract: In accordance with the law … you, the consumer, have the right to cancel within three working days. If after three days you decide to cancel, the deposit, minus charges for time, write-ups, permits, or materials that could not be canceled will be refunded.

This text is normally located above the area where you sign the contract. When you sign the contract, you agree to the above statement. Depending on the situation, most contractors will let customers cancel the contract.

If you have given your contractor a deposit and he has ordered special materials from the factory for your job, the contractor may not be able to stop the order. If that’s the case, the contractor will charge you for those materials. In return, the contractor will reimburse the balance of your deposit and deliver the materials when they come in. This will depend on the contractor, the date the contract was canceled, and the legal rights to the contract as to where the contract was signed.

To be on the safe side, be sure you know what you want before you sign the contract. A good recommendation would be to hold the contract for a week before signing so you are sure of your priorities, your project, and your choice of a contractor.

If you decide to continue with your contract and there are building permits involved, be sure to request a copy of each permit from your contractor.

Copyright © 2006 LAF/C.R.S., Inc. All rights reserved. The previous article, in whole or in part, appeared
on the market in 1988 in The Helping Hands Guide To Hiring A Remodeling Contractor.

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