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 Virginia Construction Contract for Home — Fixed Fee or Cost Plus is a legally binding agreement between a homeowner and a contractor for the construction or renovation of a residential property in the state of Virginia. This contract outlines the specific terms and conditions of the project, including the scope of work, timeline, payment details, and responsibilities of both parties involved. The term "Fixed Fee" refers to a type of contract where the contractor provides a set price for the entire project, which remains unchanged regardless of any fluctuations in labor or material costs. This type of contract provides the homeowner with a clear understanding of the overall cost of the construction project, eliminating any surprises or unexpected expenses. On the other hand, "Cost Plus" refers to a different type of contract where the contractor charges the homeowner for the actual costs incurred during the construction project, in addition to an agreed-upon percentage or fee to cover overhead and profit. This arrangement allows for more flexibility in project changes and adaptations, as the homeowner is billed for the actual expenses, but it may also lead to higher costs if unforeseen circumstances or changes arise during the construction process. Within Virginia, there may be additional variations or types of Construction Contracts for Home — Fixed Fee or Cost Plus, depending on specific variations or clauses included in the contract. Some common variations could consist of "Lump Sum Fixed Fee," where the contractor commits to a fixed payment for specific deliverables or milestones, or "Guaranteed Maximum Price (GMP)," which establishes an upper limit on costs, ensuring that the homeowner will not pay more than a predetermined amount. It's advisable for homeowners in Virginia to consult with legal professionals or construction contract experts to understand the specific terms, variations, and appropriate clauses that should be included in their construction contract. This promotes clarity, protection, and a mutually beneficial agreement for both parties involved.
