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 Washington Construction Contract for Home — Fixed Fee or Cost Plus is a legal agreement between a homeowner and a construction contractor that outlines the terms, conditions, and scope of a residential construction project in Washington state. This contract type can be divided into two categories: Fixed Fee and Cost Plus. 1. Fixed Fee Contract: In this type of contract, the contractor agrees to complete the construction project for a pre-determined fixed fee. The fixed fee is typically based on the estimated cost of materials, labor, and other project expenses. The contractor bears the risk of any cost overruns or unexpected expenses that may occur during the construction process. This type of contract provides the homeowner with a clear and set price for the project and offers budget certainty. 2. Cost Plus Contract: A Cost Plus contract, also known as a Time and Material (T&M) contract, involves the homeowner paying for the actual costs incurred during the construction process, along with an additional fee or markup (usually a percentage) agreed upon beforehand. The contractor is responsible for providing detailed records of all materials, labor, and other expenses related to the project. This contract type offers more flexibility in terms of project scope and allows the homeowner to have more control over decision-making during the construction process. Both contract types typically include several essential provisions, such as: 1. Project Description: A detailed description of the project, including architectural plans, designs, and specifications. 2. Payment Terms: The agreed-upon payment schedule, including deposit amounts, progress payments, and any hold backs to be made. 3. Change Orders: Provisions regarding any changes or modifications to the original scope of work, including time extensions and cost adjustments. 4. Warranties: The contractor’s warranty obligations and the duration of such warranties for workmanship, materials, and installations. 5. Indemnification: The responsibilities of each party in terms of liabilities, claims, and damages arising from the construction project. 6. Dispute Resolution: The process for resolving disputes, including arbitration or mediation, rather than litigation. It is important for both parties to thoroughly review and understand the terms and conditions of the contract before signing. As Washington state has specific laws and regulations regarding construction contracts, it is advisable to consult with legal professionals or seek guidance from the Washington State Department of Labor and Industries to ensure compliance.
