Ready To Remodel? First Nail Down a Solid Contract

Whether you want to improve a crummy kitchen, update a broken-down bathroom, add a room onto your cramped bungalow or gut the entire house and start from scratch, remodeling work requires making multiple decisions and careful hiring.

Even if you find a stellar home improvement company, you need a firm agreement, in writing, that specifies terms. Here are points to include in a contract for a medium-sized or major project; but even if your project is small, many of these points also apply.

No legal document can squeeze good work out of bad-faith actors and unskilled workers, so it's essential that you do your homework and shop around. But by putting in writing all the details of your job, you can eliminate common sources of disputes.

15 Terms To Include in Your Remodeling Contract 

1. Contact Information 

Make sure the contract includes the names, addresses and phone numbers of customer and contractor, plus the company's license number. 

2. Who Will Do What 

Specify who will perform various aspects of the job, and that the company is solely responsible for managing subcontractors. 

3. Detailed Project Description 

Either include a list of tasks or refer to plans and drawings. If you're hiring an architect or designer to monitor all or part of the project, that relationship should be described. 

Stipulate that all building products and materials be new; comply with all relevant laws, regulations and codes; and are covered by applicable manufacturers' warranties. 

If you're supplying appliances or some materials, list them. For millwork, hardware and other finishes, require that the remodeler provide samples for your review and approval before purchasing or fabricating the items. 

4. Price and Payment Terms

Get detailed, fixed prices for all elements of the job. 

Try to minimize the down payment and maximize the final payment. Waiting until the end to pay more of the project costs gives you more leverage to make sure the job is done well and according to your agreement. Avoid companies that require large upfront deposits. 

For most major remodeling jobs, payment is made in stages as chunks of work are completed or before large orders are placed. 

Example: A contractor might require five payments: 

1. 10% upfront deposit.
2. 30% payment after demolition and framing.
3. 30% payment after installation of drywall, windows, doors and sub-flooring.
4. 20% payment after finish work.
5. 10% final payment after all facets of the job are complete.

If you're financing the work with a home equity loan, most lenders won't release funds until they know a stage has been completed satisfactorily. 

Try to include language in the contract that holds back a percentage of the total price, called a "retainage," until you're sure the work was done well. A 10% retainage is common. 

If the company accepts credit cards, consider charging all or parts of your job. If there is a problem, you might be able to dispute the transaction with your credit card company. 

5. Quality Standards 

To protect against an obviously substandard job, include a catchall phrase that the contractor will complete the project in a professional manner and that the work will comply with applicable building codes and regulations. 

6. Warranties and Guarantees 

Include explicit references to any warranties and guarantees, including a clause stating that the labor and materials the remodeler provides will be free of defects for a certain period after the job is complete, and that repairs or other work to correct flaws will be performed for free. 

One- or two-year warranties are common but push for the longest warranty you can get. 

7. How You Can Make Changes 

Include provisions for handling unanticipated or unplanned changes — and details explaining that you and the contractor will describe the change exactly, agree on a price and incorporate the change into the overall contract. 

8. Start and Completion Dates 

Request a firm start date. The completion date probably will be an estimate. 

To protect your right to cancel the contract in the event of unreasonably long delays, consider including this phrase: "Starting and completion dates are of the essence of the contract."

9. Require That Work Be Continuous 

Some contractors bring a full crew that swarms over the work area — for the first day or two. Then, for all sorts of reasons (mainly juggling other jobs), there may be days with little or no activity onsite. Minimize these delays by specifying who will be on the job and that, weather permitting, work will be continuous. 

10. Lead Paint Testing and Abatement 

The U.S. Environmental Protection Agency requires contractors working in pre-1978 homes to be lead-safe certified. Even very small projects are covered by the law.

If your home was built before 1978, include this statement: "Contractor and all subcontractors will follow EPA regulations for testing for lead-based paint and, if detected, taking required steps to contain the work area and minimizing the generation of lead-paint dust." 

11. Indemnification and Waiver of Customer Liability 

Your contract should "hold you harmless" and protect you against claims, costs and attorney's fees stemming from the contractor's work.

12. Permits and Approvals 

The contractor should determine necessary permits, apply and pay for them, and arrange for government inspections, if required. 

The contractor also should obtain approvals by a homeowners' association or historic district, if required.

13. Liens and Waivers of Liens 

In the remodeling business, liens are a kind of currency. They're routinely taken out against property owners by subcontractors, building material dealers, even individual laborers to protect against not getting paid.

Consider adding this clause: "Prior to each payment, contractor must provide homeowner with lien releases covering work to which the payment applies. Each release must state the name of the company or individual making the release; the releasing party's address; materials or services supplied; the amount the contractor has paid for these supplies or materials; and the homeowner's address." 

14. Jobsite 

Get a definition of the workday: When it begins and when it ends. Contractors should agree to clean all debris from the jobsite and leave all appliances and household facilities in good working order at the end of each day. Require that loud or otherwise disruptive work be confined to certain hours.

15. End of the Project 

Note that you get to say when the job is over. 

A Clear Contract Pays Off 

A lot of work can go into a home remodel project before anyone ever swings a hammer. But setting clear expectations in a contract can reduce headaches for you and the contractor, and help you get the result you want.

Special Offer for BECU Members 

Until April 30, 2024, BECU members get free access to Consumers' Checkbook's ratings of local general contractors. 

About Consumers' Checkbook 

Puget Sound Consumers' Checkbook and Checkbook.org are a nonprofit organization with a mission to educate and help consumers. Checkbook also evaluates local service providers — home improvement contractors, doctors, dentists, veterinarians, stores and more. It is supported by consumers and takes no money from the companies it evaluates. BECU members can try Consumers' Checkbook for 30 days for free and can get 50% off their annual subscription.

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