1. Hard-to-Decipher Language: If you don’t understand a provision, and it can’t be explained to you, then have it removed. If it can be explained, you can ask to have the language simplified. Remodeling contracts are no place for impenetrable legalese.
Avoid a money pit and always insist on a fixed-price (also known as lump sum) contract.
2. Cost-Plus or Time-and-Materials Pricing: Anything but a fixed price is an invitation to break your budget and end up in litigation. Avoid a money pit and always insist on a fixed-price (also known as lump sum) contract.
3. Really Large Advance Payments: Some advance payment is fair, and often necessary for the contractor to begin work (if you want a kitchen that requires $60,000 worth of materials, the contractor may not be able to purchase it all on credit). But make sure the advance payment makes sense for your specific project – if materials are 20% of the overall cost, the contractor shouldn’t request 40% in advance.
Be wary if you see disclaimers like “permits not the responsibility of contractor.
4. Disclaimers: Be wary if you see disclaimers like, “services provided AS IS” or “permits not the responsibility of contractor.” A contractor should be responsible for the quality of his work and for complying with applicable laws, including obtaining permits. Home remodels shouldn’t be “buyer beware” projects.
5. Design Work to Be Done by the Contractor: Extensive remodels may involve design or architectural work that your contractor isn’t qualified for. You might not want that load-bearing wall to be torn down. Remodels involving design work (e.g., more than a simple kitchen or bathroom renovation) often requires a licensed engineer or registered architect and special contract terms that address the creation of design documents.