1. Written Details: The key is having an agreement that spells every part of the project out in as much detail as possible. It should include the job start and completion dates, and a thorough and specific scope of work, with tasks and materials itemized and priced in detail. NEVER agree to an oral contract, and don’t mistake invoice payment terms as a substitute for a written contract.
2. A Fixed Price for the Entire Project: You must agree to the price before work starts, and it must be included in the contract – in fact, it’s one of the most essential elements of the document. If your scope of work is suitably detailed (try to reduce allowances as much as you can, you don’t want to be choosing tiles under pressure when you can do it upfront), having a fixed listed price shouldn’t be a problem.
3. A Payment Schedule: Figure out a payment schedule that’s reasonably related to work done and materials purchased. With the exception of the advance payment, only pay for work completed and stick to the schedule through and through– your contractor needs to be able to manage cash flow to keep its workers, subcontractors and tradesmen on the job.
4. Change Orders: Any change in the project should be accompanied by a written, signed change order that clearly describes the work details, any increase or decrease to the contract price, and the schedule or completion date (whichever you prefer).
5. A Changes Clause: This clause exists to protect your project in the event of a dispute. Say you request a minor change order or wind up in a disagreement with your contractor – a changes clause keeps your project on track by requiring the contractor to stay on the job (as long as you are not in breach of contract, of course) while you negotiate any price changes or disputed terms.
6. A Proof of Payments Clause: Don’t pay twice for your remodel. This clause allows you to withhold final payments until your contractor provides you with mechanic’s lien waivers from subs and vendors. A mechanic’s lien is like a gun at a knife-fight – if an unpaid sub-contractor or vendor files one, even if it’s not your fault (e.g., you paid the contractor but she failed to pay her sub-contractors), you may find yourself unable to sell your home unless you pay up (again).
7. A Fit & Finish Warranty: Insist on a one-year warranty against defects in workmanship. It can still be challenging getting your contractor to return, especially to fix minor issues, but a warranty is industry standard.
8. An Arbitration Clause: Hope for the best, but plan for the worst by including an arbitration provision. Arbitration involves hiring a neutral expert to decide on a dispute. It’s a faster and cheaper alternative to lawsuits and the court system.