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 New Mexico Construction Contract for Home refers to a legally binding agreement between the homeowner and the contractor, outlining the terms and conditions for a construction project in New Mexico. This contract outlines various aspects of the project, including timelines, payment schedules, responsibilities of each party, and the agreed-upon fee structure. There are two main types of New Mexico Construction Contracts for Home: Fixed Fee and Cost Plus. In a Fixed Fee contract, the contractor agrees to complete the project for a predetermined total cost. This means that regardless of any cost fluctuations or unexpected expenses, the homeowner will pay the agreed-upon fixed amount. On the other hand, a Cost Plus contract stipulates that the homeowner will reimburse the contractor for the actual costs of labor, materials, and other project-related expenses, along with an agreed-upon fee or percentage as compensation to the contractor. This type of contract may also include a maximum or guaranteed maximum price to provide some cost certainty for the homeowner. When it comes to New Mexico Construction Contracts for Home, it is crucial to outline detailed information about the project. This includes a comprehensive scope of work, specifications, and plans to ensure both parties have a clear understanding of the project's requirements. The contract should specify the start and completion dates, payment schedule, warranties, and any penalties or incentives associated with the project. Furthermore, important clauses such as dispute resolution, change orders, and termination should be included in the contract to address potential issues that may arise during the construction process. It is recommended that homeowners consult with legal professionals to ensure the contract complies with New Mexico state laws and regulations. By clearly defining the terms and conditions in a New Mexico Construction Contract for Home, both the homeowner and the contractor can mitigate potential disputes and ensure a successful project completion.
