Although billions of dollars are spent every year in the United States on residential building and remodeling, many residential remodelers and builders can face a common problem - finding construction agreements and other forms well suited to benefit them in their construction business. Over the past twenty-six years since the first edition of The Contractor’s Legal Kit was published as a Journal of Light Construction book, tens of thousands of builders and remodelers have used the Contractor’s Legal Kit construction agreements and forms and the need for good contracts related to residential construction has only increased since then as building and remodeling has grown in United States.
The revised and new complete set of Contractor’s Legal Kit construction agreements and forms available on this site offer specific contract language that takes into account many of the unique risks and challenges that residential builders face. Some of this you will not find in other “standard” agreements. It is distilled from the author, Gary Ransone’s experiences — both good and bad — throughout many years as both a residential building contractor and practicing attorney in the field of construction law. By understanding these agreements and adapting them for use or incorporating relevant sections into existing agreements, the builder and remodeler will be taking an important step toward taking charge of the business relationship with the owner.
An Expectations GameThe relationship during a project between contractor and owner can at times be fertile ground for different types of misunderstandings and disputes. Typical problems can include things like disputed change orders, what is and is not part of the scope of work, what are reasonable and unreasonable completion dates, when payments are due, amounts of payments, disputed punch list items, and whether final payment (minus an offset for punch list work) is due upon “substantial completion” or “final completion.” These kinds of problems and so many others can cost the builder time, money, sleepless nights, and result in loss of reputation and future business. Perhaps more importantly, these and other types of largely avoidable problems weaken the initial foundation of trust between the owner and builder and that weakened trust can lead to future disputes, uncollected payments or in the worst case, unnecessary litigation.
One major reason why job tensions and disagreements develop during a project is because the owner and the builder may start out with different expectations about how specific aspects of the project will be handled. Often, this stems from a poor construction agreement furnished by the builder or the absence of a construction agreement in some cases.
The Construction AgreementThe solution to many of these problems is to establish a system for clarifying and documenting everyone’s responsibilities and duties, and thereby avoid or reduce many disputes and the loss of time, money, and peace of mind. The construction agreement is the single most valuable tool the builder possesses for this purpose. That is why the focus of this site is on construction agreements. The vast majority of arguments and legal disputes can be avoided if the builder furnishes the owner with a good construction agreement and then followed the agreement while the project was being built. Of course utilizing a good subcontract agreement is also something that can avoid misunderstandings with subcontractors and keep the builder’s insurance company happy. A revised and updated short and long form subcontract agreement is included with The Contractor's Legal Kit agreements and forms available on this site.
Establish the RulesWhen the builder furnishes the construction agreement, the builder is establishing many of the rules that will govern the business relationship with the owner. The builder can draw upon years of experience in this business and communicate to the owner how the important scope of work, business, pricing and payment aspects of the project will be handled. It’s been my experience over several decades in and around the construction business that if the builder takes this opportunity to establish reasonable rules and procedures in a written construction agreement, the owner will typically accept them, or most of them anyway. It often actually puts the owner at ease to know that there is a solid structure for how the job will proceed during every phase of the project.
If the builder fails to put these important expectations in writing in the construction agreement prior to starting the job, don’t assume that the owner will automatically be understanding later on and agree with whatever arises. Many a builder has discovered that once the construction agreement has been signed or work has commenced, the “honeymoon” period is over and the owner may or may not be willing to throw in reasonable concessions that could have easily been agreed to prior to signing a poorly worded construction agreement.
This site and the Contractor’s Legal Kit forms available on it are an attempt to help builders and remodelers do a better job of putting together construction agreements so that they can more successfully profit from and do what they enjoy doing and do best — building!