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 South Dakota Construction Contract for Home is a legal agreement entered into between a homeowner and a construction contractor for the purpose of building or renovating a residential property in the state of South Dakota. This contract defines the scope of work, sets the terms and conditions of the project, and establishes the financial aspects of the construction project. There are generally two main types of South Dakota Construction Contracts for Home — Fixed Fee and Cost Plus contracts. 1. Fixed Fee Contract: A fixed fee contract, also known as a lump-sum contract, is a type of agreement where the contractor agrees to complete the construction project for a predetermined fixed price. This price is determined by evaluating the project's estimated costs, including materials, labor, and other expenses. The homeowner pays the contractor the agreed-upon fixed fee, regardless of whether the actual costs of the project exceed or are lower than the estimated costs. 2. Cost Plus Contract: In a cost plus contract, the homeowner agrees to pay the contractor for the actual costs of the construction project, along with an additional fee or percentage of the costs as a profit. The contractor provides detailed records of all expenses incurred during the project, including receipts and invoices for materials, labor costs, and other expenses. The homeowner reimburses the contractor for these costs and pays the agreed-upon additional fee, which is typically a percentage of the total project costs. Keywords relevant to a South Dakota Construction Contract for Home — Fixed Fee or Cost Plus may include— - Scope of work: This section outlines the specific tasks and services to be performed by the contractor, including design, materials, construction, and completion dates. — Terms and conditions: This part includes important clauses relating to payment schedules, change orders, insurance requirements, warranties, dispute resolution procedures, and termination clauses. — Financial aspects: This section covers details regarding the payment structure and methods, such as progress payments, retain age, and final payment upon completion. — Schedule and delays: This part defines the schedule for the construction project and addresses potential delays, extensions, and the procedures for handling them. — Quality of work: This section specifies the standards and expectations for the quality of materials and workmanship to be upheld during the construction process. — Permits and inspections: It includes provisions regarding the responsibility for obtaining necessary permits and coordinating inspections as required by South Dakota building codes and regulations. — Indemnification and liability: This part outlines the responsibilities and liability of both the homeowner and the contractor for any damages or injuries that may occur during the construction project. — Dispute resolution: In case of any disputes or disagreements, this section establishes the preferred methods of resolving conflicts, such as mediation or arbitration. It is important for both the homeowner and the contractor to carefully review and negotiate the terms of a South Dakota Construction Contract for Home — Fixed Fee or Cost Plus before signing it to ensure that both parties' rights and responsibilities are adequately represented. Additionally, it is recommended to consult with a legal professional or an experienced construction attorney to ensure compliance with South Dakota construction laws and regulations.
