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.
San Bernardino California Construction Contract for Home — Fixed Fee or Cost Plus When embarking on a construction project in San Bernardino, California, it is crucial to establish a comprehensive and legally binding agreement between the homeowner and contractor. Two common types of contracts used in San Bernardino are the Fixed Fee and Cost Plus contracts. Fixed Fee Contract: This type of contract entails a predetermined, fixed price for the entire construction project, regardless of any unforeseen costs or changes that may arise during the process. The fixed fee agreement offers homeowners a clear understanding of their financial obligations, ensuring that the final cost will not exceed the agreed-upon amount. Cost Plus Contract: In contrast to the fixed fee contract, a cost plus contract involves the homeowner paying for the actual cost of construction plus an additional fee or percentage that covers the contractor's overhead and profit. This arrangement allows for flexibility in terms of project changes or the use of premium materials, as the homeowner is directly responsible for the actual expenditures incurred during construction. Both the fixed fee and cost plus contracts come with their own set of advantages and considerations, depending on the homeowner's preferences, budget, and expectations. It is essential to examine the key elements that should be included in any San Bernardino construction contract, regardless of the chosen type. These elements include: 1. Detailed Description of Work: The contract must outline the specific scope of work to be performed, including architectural plans, blueprints, and materials specifications. It should also identify any subcontractors or suppliers involved in the project. 2. Project Timeline: The contract should specify the start and completion dates, as well as any interim milestones or deadlines to be met during the construction process. This ensures that both parties have a clear understanding of the project's timeline. 3. Payment Schedule: The contract must include a payment schedule that outlines when and how payments will be made. For fixed fee contracts, this could involve a series of installments linked to specific milestones, while cost plus contracts may require ongoing reimbursements for material purchases and labor expenses. 4. Change Order Procedures: The contract should outline a process for handling any changes or modifications to the original project scope. This includes mechanisms for documenting and approving change orders, as well as any impact on the overall cost or timeline. 5. Insurance and Liability: The contract should clearly state the insurance requirements for both the homeowner and contractor, including general liability, workers' compensation, and property damage coverage. This protects both parties in case of accidents or unforeseen events. 6. Dispute Resolution: It is essential to include a dispute resolution clause to address any potential disagreements that may arise during the construction project. This clause can specify negotiation, mediation, or arbitration as methods for resolving conflicts, reducing the likelihood of costly litigation. In summary, San Bernardino, California, offers homeowners the option to choose between fixed fee and cost plus contracts for their construction projects. Both contract types have their own benefits and considerations. However, regardless of the chosen contract, it is vital to have a detailed agreement that covers all essential aspects of the project, ensuring a smooth and successful construction process.San Bernardino California Construction Contract for Home — Fixed Fee or Cost Plus When embarking on a construction project in San Bernardino, California, it is crucial to establish a comprehensive and legally binding agreement between the homeowner and contractor. Two common types of contracts used in San Bernardino are the Fixed Fee and Cost Plus contracts. Fixed Fee Contract: This type of contract entails a predetermined, fixed price for the entire construction project, regardless of any unforeseen costs or changes that may arise during the process. The fixed fee agreement offers homeowners a clear understanding of their financial obligations, ensuring that the final cost will not exceed the agreed-upon amount. Cost Plus Contract: In contrast to the fixed fee contract, a cost plus contract involves the homeowner paying for the actual cost of construction plus an additional fee or percentage that covers the contractor's overhead and profit. This arrangement allows for flexibility in terms of project changes or the use of premium materials, as the homeowner is directly responsible for the actual expenditures incurred during construction. Both the fixed fee and cost plus contracts come with their own set of advantages and considerations, depending on the homeowner's preferences, budget, and expectations. It is essential to examine the key elements that should be included in any San Bernardino construction contract, regardless of the chosen type. These elements include: 1. Detailed Description of Work: The contract must outline the specific scope of work to be performed, including architectural plans, blueprints, and materials specifications. It should also identify any subcontractors or suppliers involved in the project. 2. Project Timeline: The contract should specify the start and completion dates, as well as any interim milestones or deadlines to be met during the construction process. This ensures that both parties have a clear understanding of the project's timeline. 3. Payment Schedule: The contract must include a payment schedule that outlines when and how payments will be made. For fixed fee contracts, this could involve a series of installments linked to specific milestones, while cost plus contracts may require ongoing reimbursements for material purchases and labor expenses. 4. Change Order Procedures: The contract should outline a process for handling any changes or modifications to the original project scope. This includes mechanisms for documenting and approving change orders, as well as any impact on the overall cost or timeline. 5. Insurance and Liability: The contract should clearly state the insurance requirements for both the homeowner and contractor, including general liability, workers' compensation, and property damage coverage. This protects both parties in case of accidents or unforeseen events. 6. Dispute Resolution: It is essential to include a dispute resolution clause to address any potential disagreements that may arise during the construction project. This clause can specify negotiation, mediation, or arbitration as methods for resolving conflicts, reducing the likelihood of costly litigation. In summary, San Bernardino, California, offers homeowners the option to choose between fixed fee and cost plus contracts for their construction projects. Both contract types have their own benefits and considerations. However, regardless of the chosen contract, it is vital to have a detailed agreement that covers all essential aspects of the project, ensuring a smooth and successful construction process.
