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 Chicago Illinois Construction Contract for Home — Fixed Fee or Cost Plus is a legal agreement between a homeowner and a construction contractor in the city of Chicago, Illinois. This contract establishes the terms and conditions under which a construction project will be accomplished, outlining the responsibilities, obligations, and payments involved. In a Fixed Fee construction contract, the contractor agrees to complete the project for a predetermined fixed amount, regardless of any unforeseen circumstances or changes that may arise during the construction process. This type of contract provides the homeowner with cost certainty, as the agreed-upon amount will not change unless both parties agree to modify the terms. On the other hand, a Cost Plus construction contract involves the homeowner reimbursing the contractor for the actual costs incurred throughout the construction process, including materials, labor, and overhead costs. The contractor is typically paid a percentage on top of the total costs, which serves as their profit margin. Cost Plus contracts offer more flexibility when it comes to potential changes or upgrades during the construction period, as they allow for adjustments based on the actual expenses involved. When entering into a Chicago Illinois Construction Contract for Home — Fixed Fee or Cost Plus, it is essential to include specific details to ensure clarity and protect both parties. These details may include: 1. Scope of Work: A detailed description of the project, specifying the materials, finishes, and construction techniques to be used. 2. Timeline: A construction schedule outlining the expected start and completion dates, as well as any key milestones or deadlines. 3. Payment Terms: A breakdown of how payments will be made throughout the construction process, including the initial deposit, progress payments, and final payment upon completion. 4. Change Orders: Procedures for handling any changes or additions to the original scope of work, including how they will be documented, priced, and approved. 5. Permits and Approvals: Responsibilities for obtaining necessary permits and approvals from local authorities, as well as any associated costs. 6. Warranties: Any warranties or guarantees provided by the contractor or manufacturers for materials and workmanship. 7. Insurance and Indemnification: Requirements for insurance coverage, including liability and workers' compensation, to protect both parties in the event of accidents or damages. 8. Dispute Resolution: Procedures for resolving any conflicts or disagreements that may arise during the construction process, such as through mediation or arbitration. Chicago Illinois Construction Contracts for Home — Fixed Fee or Cost Plus are essential legal documents that provide a framework for successful construction projects. Homeowners should carefully review and negotiate the terms of the contract to ensure their interests are protected and their vision for the project is fulfilled.
Para su conveniencia, debajo del texto en español le brindamos la versión completa de este formulario en inglés. For your convenience, the complete English version of this form is attached below the Spanish version.
