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.
Maine Construction Contract for Home — Fixed Fee or Cost Plus refers to the legal agreement between a homeowner and a construction contractor outlining the terms and conditions for a residential construction project in the state of Maine. This contract type ensures clarity and sets specific expectations for both parties regarding the project cost, payment conditions, scope of work, and other relevant details. The two main types of contracts used in Maine's residential construction industry are the Fixed Fee Contract and the Cost Plus Contract. 1. Fixed Fee Contract: This contract type establishes a predetermined and fixed price for the entire project. The homeowner and the contractor agree upon a specific amount that includes the cost of labor, materials, profit margin, and any other expenses related to the construction. The fixed fee provides the homeowner with a clear understanding of the total project cost from the start, ensuring that no additional charges will be incurred unless specified in the contract as change orders. 2. Cost Plus Contract: Unlike the Fixed Fee Contract, this agreement calculates the project cost based on the actual expenses incurred by the contractor during the construction process. Under a Cost Plus Contract, the homeowner agrees to reimburse the contractor for the direct costs such as labor, materials, and subcontractor fees, in addition to a predetermined percentage or a fixed fee that covers the contractor's overhead and profit. This contract type may provide more flexibility for the homeowner, as any changes or modifications to the original plans can be accommodated without renegotiating the entire contract. Both types of contracts typically include a detailed description of the scope of work, including architectural plans, specifications, and any necessary permits or inspections. They also outline the payment structure, timeline, and any warranties or guarantees provided by the contractor. The contracts may specify the responsibilities of each party, such as obligations related to insurance, licenses, site conditions, and dispute resolution mechanisms. It is important for homeowners in Maine to carefully review and understand the terms and conditions of the construction contract before signing it. Seeking legal advice and ensuring that all desired elements are included and properly defined can help protect both parties and lead to a successful construction project.
