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.
A Kentucky Construction Contract for Home — Fixed Fee or Cost Plus is a legally binding agreement between a homeowner and a construction contractor for the construction or renovation of a residential property in the state of Kentucky. This contract specifies the terms, conditions, and obligations for both parties involved in the construction project. In a fixed fee contract, the contractor agrees to complete the construction project for a predetermined, fixed cost. This type of contract provides clarity for the homeowner regarding the overall budget. It ensures that the contractor is responsible for any additional costs that arise during the construction process, unless caused by changes or modifications requested by the homeowner. Fixed fee contracts are commonly used for smaller residential construction projects where the scope of work is well-defined and anticipated costs are relatively stable. On the other hand, a cost-plus contract, also known as a time and materials contract, involves the reimbursement of the contractor's actual costs plus an agreed-upon fee or percentage for their services. This type of contract is often utilized for larger, more complex projects where the scope of work and potential unforeseen expenses are uncertain. The cost-plus contract allows for flexibility in changing project conditions, such as unexpected material price increases or regulatory changes. However, it puts more financial risk on the homeowner, as they will be responsible for covering any additional costs incurred during the project. It is important to note that there may be variations or customized versions of these contract types, depending on the specific needs and requirements of the construction project. Some contracts may combine elements of both fixed fee and cost-plus approaches to provide a balanced solution for both parties. Keywords: Kentucky Construction Contract, Home, Fixed Fee, Cost Plus, Residential Property, Renovation, Terms, Conditions, Obligations, Contract Types, Fixed Cost, Budget, Additional Costs, Changes, Modifications, Time and Materials, Reimbursement, Fee, Percentage, Flexibility, Unforeseen Expenses, Financial Risk, Customization.
