The Home Remodeling Contract: 5 Things to Look Out for Before You Sign

A home remodel can be a big undertaking, so it’s important to get things right from the get go. Having a solid agreement in place with your contractor can make all the difference. Here are 5 things to look out for before you sign your home remodeling contract.

A good remodeling construction contract not only lays out what you can expect from your builder and what your project will look like when it’s completed, it also helps protect you in case of any miscommunications or disputes.

We’ve worked with a lot of clients who had entered into agreements with other builders, only to regret those contracts later. So these are tips aimed at helping you spot some red flags in order to avoid getting into similar situations.

That brings us to the first thing you want to make sure your home remodeling contract includes…

1. Clearly communicated scope of work

Before you sign on the dotted line, you really want to ensure that you have a clear idea of what work the contractor is agreeing to do. What you want to see is an exhaustive, comprehensive scope of work.

This should go over in detail and in writing what work is covered, and it can’t be nebulous. If it doesn’t include enough information about the project specifics — or it’s mostly a verbal contract — you could find yourself on the losing end if you and your contractor disagree about a certain aspect of the work at some point during construction.

There are three ways to communicate the scope.

1) A narrative scope is a written description of the project. This can be a good way to communicate the scope, but for larger projects can create very lengthy specifications documents that are unwieldy in the field.

2) Some companies combine this with the drawings. This is better, but there are often can be discrepancies between the two which causes confusion.

3) Since we are a Design/Build firm, we use the drawings as our scope of work. This cuts down on confusion since the documents that are being used to build in the field are the same ones that are part of your contract.

2. Specific product details

Another section you want to make sure is included in your home remodeling contract is a very detailed set of specifications for the products that will be going into your remodel.

home remodeling contract: product details

We recently worked with a client who had hired a previous contractor to do her kitchen remodel. They had dramatically different ideas about what was going into the kitchen. When it came to the cabinets, she had assumed that a very high end set was going to be installed. But the contractor had actually planned to buy and install some cabinets from a big box retailer.

The contract simply said that the builder would do a kitchen remodel, but didn’t specify any of the products to be included. A contract with specific product details can significantly reduce any of these types of miscommunication. You want to make sure that every single product in the remodel is included in the contract.

3. Worst-case scenarios are accounted for

Next, you want to make sure you’re covered if any worst-case scenarios crop up during your project. These could include:

What happens if the builder opens the wall and finds something unexpected?

Your agreement should include a section that describes what steps will be taken if this occurs and what the related costs may be.

What happens if you want to fire the contractor?

There should be language around the termination process if you feel like your project isn’t going the way you expected or if both you and the contractor don’t feel like it’s a good match.

What happens if material costs suddenly spike?

During your project, something like lumber prices may go up dramatically. Is the contractor going to come back to you and ask for more money or not? You want to know what the plan is for something like this so you’re not left at a disadvantage later on.

4. Warranty details

You also want to make it includes details on their warranty process, how long the warranty lasts, and what their warranty claims process is like.

Every contractor in Oregon is required to have a 1-year labor warranty. Most reputable ones have longer ones and also have a robust claims process that clearly spells out what happens if something goes wrong and the remodel is still under warranty.

5. Retainage specifications

The final item on the list is retaining language. Retainage is basically a small amount of money due to the contractor that is set aside to ensure the builder will complete the project.

retainage: small remodel items left to do

So, your remodel is nearly finished, but maybe a light fixture got back ordered or some other touch ups need to be finished. The retainage sum will help make sure that those items are taken care by the contractor before you make the final payment in full.

Typically, this amount is about two times what it would cost to complete the outstanding work.