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.
An Ohio Construction Contract for a Home is a legally binding document that defines the terms and conditions of a construction project between a homeowner and a contractor. This type of contract can be either a Fixed Fee or a Cost Plus contract, each having its own distinct characteristics. 1. Fixed Fee Contract: In a Fixed Fee Contract, the contractor provides a specific quote to the homeowner for the entire project. The fee is predetermined and remains constant, regardless of any unforeseen circumstances or changes during the construction process. This type of contract offers clarity and predictability to both parties, as the final cost is agreed upon before the work begins. However, it is essential for the homeowner to carefully review the contract to ensure that all project details, costs, and specifications are accurately outlined. Any additional costs, change orders, and disputes should be addressed in the contract to avoid misunderstandings later on. 2. Cost Plus Contract: On the other hand, a Cost Plus Contract specifies that the homeowner will reimburse the contractor for all incurred costs, along with an agreed-upon fee or percentage for overhead and profit. This type of contract allows for more flexibility, especially in situations where the scope of work may change or unforeseen expenses arise. The Cost Plus Contract typically consists of two main components: the direct costs (such as materials, labor, and subcontractors) and the contractor's fee. It is crucial for the homeowner to maintain transparency and regular communication with the contractor to understand and track the project costs. Moreover, a Cost Plus Contract commonly includes provisions for documentation, such as detailed invoices or receipts, to substantiate the expenses. Additionally, it may also outline a maximum allowable budget or a cost cap to prevent costs from spiraling out of control. Overall, whether opting for a Fixed Fee or Cost Plus Contract, homeowners in Ohio should conduct thorough research and carefully review all contract details. It is advisable to consult with legal professionals or construction experts to ensure that the chosen contract aligns with their needs, project specifications, and budget.
