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 Louisiana Construction Contract for Home refers to a legally binding agreement between a homeowner and a contractor for the construction or renovation of a residential property in the state of Louisiana. There are two primary types of contracts in this context: Fixed Fee and Cost Plus. 1. Fixed Fee Contract: This type of contract establishes a set price or fee for the entire project. The homeowner and contractor agree upon the total cost for the construction or renovation, including labor, materials, and overhead expenses. The fixed fee is usually determined through detailed cost estimation and negotiation between both parties. This contract ensures that the homeowner knows the exact cost of the project upfront, which remains consistent throughout the construction process, regardless of any unforeseen expenses or changes. 2. Cost Plus Contract: In a Cost Plus contract, the homeowner agrees to reimburse the contractor for the actual cost incurred during the construction or renovation, including material expenses, labor costs, and subcontractor fees. Additionally, a predetermined fee, often a percentage of the total cost, is added to the sum. This fee is meant to cover the contractor's overhead and profit margin. Unlike a Fixed Fee contract, a Cost Plus contract allows for flexibility in the project, as changes or additions can be accommodated without renegotiating the entire cost. However, this type of contract may pose more financial uncertainty for the homeowner. Important keywords and clauses that may be included in Louisiana Construction Contracts for Home — Fixed Fee or Cost Plus: 1. Project Description: A detailed description of the scope of work, materials, and specifications required for the construction or renovation project. 2. Payment Terms: Defines the payment schedule, including milestones or completion stages, the method of payment, and any allowable retain age (a certain percentage of payment withheld until the project is completed). 3. Change Orders: Allows for modifications or additions to the original contract, specifying the process for requesting and approving changes, associated costs, and potential adjustments to the timeline. 4. Termination Clause: Outlines the conditions under which either party can terminate the contract, including any penalties, notice periods, or dispute resolution procedures. 5. Dispute Resolution: Specifies the method for resolving any disputes arising during the construction process, such as mediation, arbitration, or litigation. 6. Indemnification and Insurance: Addresses the responsibility for liability, insurance coverage, and indemnification against claims, damages, or injuries that may occur during or after the construction project. It's important to note that specific language, clauses, and legal requirements may vary depending on the complexity of the project, the parties involved, and other factors. Therefore, seeking legal advice and customization of the contract to suit individual needs and comply with Louisiana state laws is highly recommended.
