This form is a Construction Contract. The form contains the following subjects: scope of work, work site, and insurance. The contractor's warranty is limited to defects in workmanship within the scope of the work performed by the contractor.
What is a Construction contract agreement?
If you’re planning to build, renovate or reconstruct your house, you will need to enter into a contract for home construction with the building contractor, defining your mutual rights and responsibilities. This agreement contains project specifics, the contractor’s license and insurance details, the requested scope of work, etc. It may also determine the potential lien on the property should the work not be paid in full.
Types of construction contracts
Depending on the payment arrangements determined by parties, there are four basic types of home builders’ contracts:
1. Fixed price (or lump-sum) agreements set the price for the completed job right from the start. Although fixed, the document may also include provisions defining penalties (for example, if the constructor fails to finish the work on schedule).
2. Cost plus construction agreements set the price for the finished work based on building materials and labor with additionally mentioned “plus” (a percentage of the total costs or a fixed fee).
3. Time and material agreements set the price for the work without a “plus,” but the client pays the contractor a daily or hourly rate while they are under contract.
4. Unit-price agreements are standard in bidding, particularly for federal building projects. Both owner and contractor define the price that the contractor charges for a standard unit without any specific extra fees for other units.
The first two types of contract for home construction mentioned are the most popular ones. Let’s take a closer look at them.
Fixed price vs. cost-plus contract benefits
The fixed price agreement benefits owners more than builders, as it determines at the moment the parties seal the deal the exact price the contractor will get after they complete all the work. Builders risk not getting the estimated profits they initially anticipated, as expenses may increase significantly but remain the constructor’s responsibility.
The cost-plus construction deal contains the evaluation of the final project cost; however, it doesn’t determine the final contract price until the contractor completes all the work. Unlike the fixed-price agreement, it separates expenses and sets the profit rate (as a percentage of the final project cost or as a flat amount), so contractors prefer this type of agreement; it is riskier for homeowners.
Information you should provide in the construction contract agreement
The presented Construction Contract for Home is a universal multi-state construction contract template. This sample describes typical terms for a home building contract. Download a printable document version from our website or amend and fill it out online. Make sure to provide the following information:
• Name and contact details of the contractor and their license number;
• Name and contact details of the homeowner;
• Property legal description from county clerk’s records;
• Project description with blueprints and building specifications;
• Scope, description of work, and its estimated final dates;
• Costs of work and responsibilities of parties for any breach of contract.
The District of Columbia Construction Contract for Home refers to a legally binding agreement between a homeowner and a contractor for the construction of a residential property in the District of Columbia. This contract can be categorized into two primary types: Fixed Fee and Cost Plus. 1. Fixed Fee Contract: In this type of agreement, the contractor agrees to complete the construction project for a predetermined fixed amount. The fixed fee encompasses all expenses related to labor, materials, permits, insurance, and other costs necessary for the project's completion. The homeowner pays the contractor this agreed-upon fixed fee, regardless of whether the actual costs of construction exceed or fall short of the amount specified in the contract. A fixed fee contract provides certainty and stability to both parties as costs remain constant throughout the project. 2. Cost Plus Contract: Unlike the fixed fee contract, a cost plus contract involves payment based on the actual costs incurred during the construction process. The contractor is entitled to reimbursement for both direct and indirect project-related expenses, along with an agreed-upon percentage or fee on top of the costs. This type of contract offers more flexibility in terms of pricing as it allows adjustments for any unforeseen circumstances or changes in the scope of work during construction. However, it also introduces a degree of uncertainty for the homeowner concerning the final construction costs. Both types of contracts include several essential elements to protect the rights and interests of both parties involved. These elements may include project specifications, construction timeline, payment terms, warranties, dispute resolution mechanisms, termination clauses, and any other applicable provisions required by the District of Columbia building regulations. It is crucial for homeowners to thoroughly review and understand all the terms and conditions of the District of Columbia Construction Contract for Home before signing it. They may consider seeking legal advice to ensure they are fully aware of their rights and responsibilities as well as to negotiate any terms that need clarification or modification. Likewise, contractors should also ensure that the contract accurately reflects the agreed-upon scope of work, pricing structure, and other key provisions to avoid any future disputes or misunderstandings with the homeowner.
