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 Massachusetts Construction Contract for Home refers to a legally binding agreement between a homeowner (client) and a contractor (service provider) for the construction, renovation, or remodeling of a residential property located in the state of Massachusetts. This contract can be established based on either a Fixed Fee or Cost Plus structure. 1. Fixed Fee Contract: In a Fixed Fee contract, the contractor provides a set price for the entire construction project. This includes all labor, materials, permits, and overhead costs. The fixed fee is determined based on the estimated project scope, specifications, and any additional services required. This type of contract provides the homeowner with the benefit of a predictable cost, as the price remains fixed throughout the project, regardless of any unforeseen circumstances or increased expenses. 2. Cost Plus Contract: In a Cost Plus contract, the contractor charges the homeowner for the actual costs incurred during the construction project, along with an agreed-upon fee or percentage for their services. This fee usually covers the contractor's overhead costs, such as supervision, administration, and profit margin. The homeowner reimburses the contractor for all direct costs, such as labor, materials, permits, and subcontractor fees. This type of contract offers transparency as it provides a breakdown of all expenses, allowing the homeowner to see the actual costs incurred. Both types of contracts may include specific provisions, such as project timelines, change orders, payment schedules, insurance requirements, dispute resolution processes, and warranties. These contractual terms are designed to protect both parties and ensure that the project proceeds smoothly and in accordance with the agreed-upon terms. It is essential to consult with legal professionals or knowledgeable experts to ensure that the construction contract aligns with Massachusetts laws and regulations.
