One of the best ways to avoid construction disputes is negotiate and follow a well-written construction contract. Most construction disputes can be traced back to the parties' failure to write, understand, and follow a well-written contract. A well-drafted construction contract clearly sets out the work to be done, the price to be paid for the work, and the terms and conditions of payment. The contract should also allocate various foreseeable risks between the parties. When the parties allocate a list of potential risks, the contract becomes longer, but it reduces the potential for disagreements in "gray areas" that are not addressed at all - assuming that both parties take the time to read and understand the lengthy, dryly-worded document. Of course, failure to read a written agreement is not a valid defense.
Well-written construction contracts often include the following provisions:
We recommend that you keep a signed copy of your contract, and all related materials in a safe place. All consumer protection notices should be read, understood, and maintained with your contract documents.
What should your home remodeling contract include?
Once you read your home remodeling contract carefully, review it with your home remodeler to clarify any wording you do not understand. If you still have questions after this meeting, you should discuss them with your attorney. When all your questions have been answered, you're ready to sign the contract.
What Is An Arbitration Clause?
Construction contracts often contain arbitration clauses. Arbitration is a form of alternative dispute resolution (ADR). It is a way to settle disputes outside, or instead of, a civil lawsuit.
Federal law supports and encourages arbitration as an alternative to civil lawsuits. Arbitration can be an effective, efficient way to resolve differences when parties to a contract have major disputes that they just cannot resolve on their own.
It is important that you understand the terms of all parts of your contract, and it is particularly important for you to fully understand and agree with the terms if an arbitration clause is in your contract. For example, you need to know:
Arbitration clauses are a little bit like a pre-nuptial agreement in a marriage. It spells out how the parties will resolve their differences in the event things don't work out. So be sure you understand and agree with the terms of any arbitration clause before you sign any construction contract.
What is a Construction Lien?
A construction lien is a claim upon property for money owed to a contractor, material supplier or anyone who supplied labor or materials for improvements to the property.
If your contractor isn't paid, or if your contractor does not pay subcontractors, employees, rental equipment or material suppliers, or others who are owed money for work on your property, they may lien your property for payment.
It is in your best interest to verify that all bills are paid, even if you pay your contractor in full.
Because your construction contract may represent the single biggest purchase you and your family may ever make, you may wish to have your own lawyer review the terms of your construction contract before you sign the contract.