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Home Construction Contract Tips | Patrick Au

Home Construction Contract Tips

For those individuals who are lucky enough to undertake a new home construction project or remodel a portion of their current home, the process is very exciting.  However, it can also be very stressful.  If you speak to anyone who has dealt with a construction project, it is likely that you have heard the expression: “Count on the construction to take twice as long and cost twice as much”.

However, with a few simple tips, you can minimize the foreseeable problems.

  • Select a Contractor:  Interview several contractors and get numerous bids.  Do not necessarily chose the highest bid or the lowest bid.  A high bid does not guarantee superior workmanship and lack of issues.  On the other hand, the lowest bid may result in unexpected change orders and expenses.  Inquire whether the contractor has ever performed a similar size construction project.  Get references and check them out.  Also, make sure the Contractor is properly licensed and make sure the license is active and in good standing with the California Contractors State License Board (www.cslb.ca.gov).
  • Enter into a Contract:  A contract is a legal agreement between two or more people. Note that in California, any home improvement project valued at over $500 requires a written contract. There are many requirements that must be in a home improvement contract.  A list of these requirements are on the California Contractors State License Board website.   Of note, the contract should clearly identify the scope of work to be performed and the costs thereof.  It should include a payment schedule.  Note that the down payment cannot be more than $1,000 or 10 percent of the contract price, whichever is less.  Also, periodic payments to the Contractor cannot exceed the value of the work performed. The contract should also address mechanics liens and include a 3 day right to cancel.
  • Costs saving measures:  If you are capable, consider performing portions of the project yourself.  It can be very rewarding, and fun, to do some of the work yourself.  Again, just make sure that the scope of work of the Contractor is clearly spelled out.

There are bound to be a few bumps along the way.  However, by following these simple suggestions, you’ll be enjoying your new home or remodel in no time!

The attorneys at Bremer Whyte Brown & O’Meara LLP have the expertise and experience dealing with different areas of construction litigation and are particularly qualified to assist you in creating a construction contract.