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.
Utah Construction Contract for Home — Fixed Fee or Cost Plus is a legally binding agreement between a homeowner and a construction contractor in the state of Utah. This contract outlines the terms and conditions regarding the construction or renovation of a residential property and specifies the payment structure to be followed. The first type of Utah Construction Contract for Home is the Fixed Fee contract. In this type of agreement, the contract outlines a specific, predetermined fee that the homeowner will pay to the contractor for the completion of the project. The fixed fee is usually based on the estimated cost of construction or renovation. The contractor is responsible for completing the project within the agreed-upon fee and delivering it to the homeowner on time. Any additional costs incurred during the construction process are covered by the contractor, ensuring that the homeowner is not required to pay any extra expenses beyond the fixed fee. The second type of Utah Construction Contract for Home is the Cost Plus contract. This agreement differs from the fixed fee contract as it allows for flexibility in terms of cost. In a cost plus contract, the contractor is reimbursed for the actual expenses incurred during the construction process, along with an agreed-upon fee (often a percentage of the total cost). This fee is added on top of the actual expenses, which may include labor, materials, permits, and other direct costs. The homeowner is required to pay the contractor the actual expenses incurred, allowing for transparency in the cost of the project. This type of contract is beneficial when the scope of the project is uncertain or when changes are likely to occur during construction. Both the Fixed Fee and Cost Plus contracts are aimed at protecting the interests of both the homeowner and the contractor. They provide clarity on the responsibilities, timelines, and payment structure, ensuring that both parties are aware of their obligations. These contracts also typically include provisions for dispute resolution, change orders, warranties, and indemnification clauses to protect the parties in case of any unforeseen circumstances or disagreements. It is important to note that the specific terms and conditions outlined in a Utah Construction Contract for Home — Fixed Fee or Cost Plus may vary depending on the agreement reached between the homeowner and the contractor. Therefore, it is vital for both parties to thoroughly review and understand the terms of the contract before signing it, considering seeking legal counsel if necessary.
