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 Maryland Construction Contract for Home — Fixed Fee or Cost Plus is a legal agreement between a homeowner and a contractor defining the terms and conditions for a construction project. It outlines the scope of work, payment structure, project timeline, and other important details. In a Fixed Fee Contract, the total cost of the project is determined upfront and remains unchanged, regardless of any unforeseen expenses or changes in the scope of work. This type of contract provides homeowners with a fixed budget and eliminates financial risks associated with unexpected costs. On the other hand, a Cost Plus Contract involves the homeowner reimbursing the contractor for the actual costs incurred during the construction process, along with an agreed-upon percentage or fee for the contractor's services. This type of contract allows for flexibility in accommodating changes during the project, and the homeowner has more control over the selection of materials and finishes. Both contract types have their advantages and disadvantages, and the choice is often dependent on the homeowner's preferences, project complexity, and budget constraints. It is essential to include specific keywords in the Maryland Construction Contract for Home — Fixed Fee or Cost Plus to clarify the rights and responsibilities of both parties. These keywords may include: 1. Scope of Work: Clearly describe the work to be completed, including architectural plans, permits, materials, and any additional services (such as demolition or site preparation). 2. Payment Schedule: Outline the payment structure, including the initial deposit, progress payments, and the final payment. Specify the amount or percentage to be paid at each milestone or stage of the project. 3. Change Orders: Clarify the process and conditions under which changes to the scope of work can be made. Specify that any changes must be agreed upon in writing by both parties before implementation and discuss how additional costs and timeline adjustments will be handled. 4. Dispute Resolution: Define the process for resolving any disputes or conflicts that may arise during the construction project. Consider including clauses for mediation or arbitration before pursuing legal action. 5. Site Conditions: Detail the conditions under which the contractor will be working, including access to the property, work hours, and responsibilities related to waste disposal and site cleanup. Some specific types of Maryland Construction Contracts for Home — Fixed Fee or Cost Plus may include variations such as: — Maryland Home Improvement Contract: This is a specific contract for home improvement projects that are estimated to cost over $500. It includes clauses required by the Maryland Home Improvement Commission to protect homeowners' rights and outline responsibilities. — Maryland Subcontractor Agreement: This contract is used when hiring subcontractors to perform specific tasks within the construction project. It reflects the terms agreed upon between the general contractor and subcontractor, including scope of work, payment terms, and timeline. Overall, the Maryland Construction Contract for Home — Fixed Fee or Cost Plus is a comprehensive legal document that ensures clarity and protection for both homeowners and contractors throughout the construction process.
