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.
When embarking on a construction project in Houston, Texas, homeowners often enter into a construction contract to ensure clarity and protection for both parties involved. There are typically two common types of Houston Texas construction contracts for homes: Fixed Fee and Cost Plus. Fixed Fee Contract: A Fixed Fee Construction Contract is a widely used agreement in which the homeowner and the contractor agree upon a predetermined, fixed price for the entire construction project. This type of contract offers several advantages for homeowners as it provides a clear understanding of the total cost from the outset. With a fixed fee contract, homeowners won't be subjected to unexpected cost overruns, as the contractor is responsible for managing and absorbing any additional expenses that may arise during the construction process. In a Fixed Fee Construction Contract, the homeowner and the contractor outline the scope of the project, project timeline, and all necessary details regarding the materials, labor, and permits required. This contract typically includes payment schedules based on project milestones, ensuring that the contractor receives payments as specific stages of the construction are completed. Cost Plus Contract: A Cost Plus Construction Contract, on the other hand, involves the homeowner paying the actual cost of construction plus an additional fee or percentage agreed upon with the contractor. This type of contract is particularly useful when the project scope is uncertain or may change during construction. It allows for flexibility in the budget and timeline, accommodating variations that may arise throughout the building process. Under a Cost Plus Construction Contract, the homeowner pays for the actual cost of materials, labor, subcontractor fees, permits, and other related expenses. In addition to the cost, the contract stipulates the contractor's fee, usually calculated as a percentage of the total project cost or billed as a fixed amount. Choosing the Right Contract: Deciding between a Fixed Fee or Cost Plus Construction Contract depends on various factors unique to each project. Homeowners should consider the project complexity, potential change orders, and their risk tolerance. If the project scope is well-defined and additional changes are unlikely, a Fixed Fee Contract may be the best choice. However, for more complex projects with potential uncertainties, a Cost Plus Contract provides greater flexibility to adapt to changes and allows for better collaboration between the homeowner and the contractor. Regardless of the chosen contract type, it's essential to have a comprehensive written agreement that clearly outlines project details, payment terms, dispute resolution mechanisms, warranty provisions, and any other relevant clauses to ensure a smooth construction process and protect both parties' interests. Consulting with a legal professional familiar with Houston construction laws is advised to ensure these contracts comply with local regulations and best serve the homeowner's needs.When embarking on a construction project in Houston, Texas, homeowners often enter into a construction contract to ensure clarity and protection for both parties involved. There are typically two common types of Houston Texas construction contracts for homes: Fixed Fee and Cost Plus. Fixed Fee Contract: A Fixed Fee Construction Contract is a widely used agreement in which the homeowner and the contractor agree upon a predetermined, fixed price for the entire construction project. This type of contract offers several advantages for homeowners as it provides a clear understanding of the total cost from the outset. With a fixed fee contract, homeowners won't be subjected to unexpected cost overruns, as the contractor is responsible for managing and absorbing any additional expenses that may arise during the construction process. In a Fixed Fee Construction Contract, the homeowner and the contractor outline the scope of the project, project timeline, and all necessary details regarding the materials, labor, and permits required. This contract typically includes payment schedules based on project milestones, ensuring that the contractor receives payments as specific stages of the construction are completed. Cost Plus Contract: A Cost Plus Construction Contract, on the other hand, involves the homeowner paying the actual cost of construction plus an additional fee or percentage agreed upon with the contractor. This type of contract is particularly useful when the project scope is uncertain or may change during construction. It allows for flexibility in the budget and timeline, accommodating variations that may arise throughout the building process. Under a Cost Plus Construction Contract, the homeowner pays for the actual cost of materials, labor, subcontractor fees, permits, and other related expenses. In addition to the cost, the contract stipulates the contractor's fee, usually calculated as a percentage of the total project cost or billed as a fixed amount. Choosing the Right Contract: Deciding between a Fixed Fee or Cost Plus Construction Contract depends on various factors unique to each project. Homeowners should consider the project complexity, potential change orders, and their risk tolerance. If the project scope is well-defined and additional changes are unlikely, a Fixed Fee Contract may be the best choice. However, for more complex projects with potential uncertainties, a Cost Plus Contract provides greater flexibility to adapt to changes and allows for better collaboration between the homeowner and the contractor. Regardless of the chosen contract type, it's essential to have a comprehensive written agreement that clearly outlines project details, payment terms, dispute resolution mechanisms, warranty provisions, and any other relevant clauses to ensure a smooth construction process and protect both parties' interests. Consulting with a legal professional familiar with Houston construction laws is advised to ensure these contracts comply with local regulations and best serve the homeowner's needs.
