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 North Carolina Construction Contract for Home — Fixed Fee or Cost Plus is a legal agreement between a homeowner and a construction contractor for the construction or renovation of a residential property in the state of North Carolina. This contract specifies the terms and conditions under which the construction work will be carried out, including the payment structure and the scope of work to be performed. The two main types of North Carolina Construction Contracts for Home are Fixed Fee Contracts and Cost Plus Contracts, each with their own unique characteristics. 1. Fixed Fee Contract: In this type of contract, the contractor agrees to complete the construction project for a predetermined fixed fee or lump sum. The total cost of the project is agreed upon and stated in the contract, and the contractor is responsible for completing all the work within that agreed budget. This type of contract provides clarity and budget certainty for the homeowner, as they know exactly how much they will be paying for the construction project. 2. Cost Plus Contract: In a Cost Plus Contract, the homeowner agrees to pay the contractor for the actual cost of labor, materials, and other expenses incurred during the construction project, along with an additional fee or percentage of the total cost as agreed upon. This type of contract is often used when the project scope is not clearly defined, or when the homeowner wants more flexibility in terms of making changes or additions to the original plan. The contractor provides detailed invoices and receipts for all expenses, and the homeowner pays for the cost of construction on an ongoing basis. Both types of contracts have their own advantages and considerations. A Fixed Fee Contract provides a clear budget and cost certainty, but there may be limited flexibility in making changes to the original scope of work. On the other hand, a Cost Plus Contract allows for greater flexibility and potentially more customization, but it can also result in increased costs if the scope of work expands significantly. Regardless of the type of contract chosen, it is essential to include specific details in the agreement, such as the start date and estimated completion date of the project, the payment schedule, any permits or licenses required, insurance and liability provisions, dispute resolution mechanisms, and other relevant clauses to ensure a smooth and legally binding construction process. It is important for both the homeowner and the contractor to thoroughly review and understand the terms and conditions of the North Carolina Construction Contract for Home — Fixed Fee or Cost Plus before signing it, and if needed, consult with legal professionals to ensure compliance with state laws and regulations.
