Why a Remodel Contract is Important
Bathroom remodeling, just like other forms of home improvement, is risky business from a legal standpoint. All parties involved, from contractors to suppliers to subcontractors to homeowners, should protect their interests with a comprehensive bathroom remodel contract. Any contracting veteran will tell you that a remodel contract is basically an insurance policy keeping you and others protected against any possible pitfalls. A bathroom remodel contract protects homeowners by laying out a concrete plan for the work and stipulating details such as date payments are due , what services are included and whether or not permits must be obtained. It also provides contractors with invaluable protection by establishing costs and construction parameters, authorized time changes and who is responsible for paying subcontractors. Just as with any other remodel, the bathroom remodel process has a great deal of moving parts that should be clearly laid out in the remodel contract. Homeowners should insist that their contractor provide them with a complete remodel contract template following a thorough estimate of the project.
What to Include in a Bathroom Remodel Contract
A bathroom remodel contract should be as specific as possible. Anything that is left unwritten could lead to a difference of interpretation and lead to a dispute. For a homeowner that wants to protect themselves, there are a few major items that should be included in a bathroom remodel contract. These are:
Scope of Work
The scope of work needs to be extremely specific. Bathroom remodels can be both extensive and costly. It is crucial that the client and the contractor are both on the same page before any money is paid or any work begins. If the homeowner envisions a complete overhaul of their bathroom, but the contractor only reviewed the current existing conditions and pricing is based off of the existing conditions, then the homeowner might not be happy with the final results of their bathroom remodel.
The scope of work should have an extensive level of detail and should also include the liability of the contractor for materials and labor. This means that if a certain material is used and results in water or plumbing damage at a later date, then the contractor will be responsible for any damages that result.
Contractors and homeowners should be in agreement regarding code requirements. Many homeowners allow their contractors carte blanche with respect to materials and finishes used in their remodel. In those instances where the homeowner permits the contractor to make the decisions regarding materials and finishes, the homeowner may not have any recourse if the contractor installs materials and finishes that are not in compliance with code. Have the contractor line up the materials against code before beginning the remodel.
Timeline
The timeline provided in the bathroom remodel contract should include start date and end date. If the contractor has committed to a timeline, they must meet expectations. The client can use the contract to ensure the contractor completes the remodel in a reasonable time or at least within the time-line provided in the contract. Reasonable time means that any delays due to weather, acts of God, strikes, etc. shall not be included in the timeline.
The parties can agree to liquidated damages for late completion. Liquidated damages are determined by multiplying the per diem amount by the number of days of delay. The per diem amount is determined by the total contract amount divided by the total number of days in the contract.
Payment Terms
The bathroom remodel contract should outline the payment terms agreed to by the parties. Payment terms may include providing a deposit before work begins, providing a percentage upon completion of the rough-in stage, providing a percentage upon completion of the rough finish, and providing a percentage upon completion of the entire remodel.
The bathroom remodel contract should also specify when the home owner is to make the payments. Payments for labor and materials should be made at the times set forth in the contract, not upon demand of the contractor. Failure to comply with the payment terms could result in a breach of contract action.
Every bathroom remodel contract should contain these major items in order to ensure that both the homeowner and the contractor understand what is going to be done in the remodel and how long it is going to take to complete. After all, the judge or jury hearing a contract dispute will expect each party to perform under the terms of the contract.
How to Edit a Remodel Contract Template
Homeowners should work with competent, licensed bathroom remodel contractors to customize the following sections depending on the specific nature of the bathroom renovation. A bathroom remodel contract template often contains these sections:
- Scope of Work: This either describes the work in general or by specific tasks broken down by category so the contractor and homeowner (or the homeowner’s representative, including a designer) can agree on exactly what will be done (e.g., flooring, plumbing, electrical, cabinetry, etc.). These tasks should list the materials by type and make/model consistent with the warranties and guarantees typically provided. Warranties and guarantees for materials and labor should be clearly stated as well as any limiting language for which the homeowner should be aware.
- Schedule of Work: A reasonable timetable for completion should be listed that is agreed upon by both parties. Schedule penalties could be implemented to incentivize timely completion, but often are too little to gain the benefit of the added expense.
- Final Payment Terms: Often final payment is not due until completion or the final inspection. A contractor who ensures payment for goods during a remodel might want a right to demand payment prior to completion. Parties should agree on when payment is required.
- Termination/Default Rights: If either party breaks the agreement, how will the contract be terminated? What happens if there is a default on either side? Remedies for remedial action, or what constitutes a default should be clearly stated.
- Governing Law: Every state has different laws on contracts and construction. Agreement on which state law governs the contract should be made.
Note: This information is not a substitute for proper legal advice, and every remodel contract should be drafted and completed with licensed legal assistance, as appropriate.
Common Mistakes Found in Remodel Contracts
Key oversights often lead to costly consequences down the line, so write bathroom remodel contracts with these five things in mind:
- Lowball estimates. Making costs as low as possible is a natural part of the job, but don’t write estimates beyond the law of physics. Clearly outline the scope of work to avoid scope creep that drives up costs.
- No timeframe. Bathroom remodels should never be open ended to accommodate arbitrary delays. Guesswork is not acceptable for contractors or homeowners. Delays are inevitable, but they should be attributable to cause.
- Failure to address payment schedules. Homeowners and contractors should be on the same page when it comes to payment schedules . These should be clearly outlined in your remodeling contract. Be specific – include short milestones such as invoice payments along with longer-term payment milestones based on project completion.
- No dispute resolution clauses. Bathroom remodel contracts should always include dispute resolution clauses to outline the legal steps required before either party can take further action. For instance, most states require mediation before a homeowner can sue.
- Failure to check contractor’s references. Don’t skip. Insist on checking remodelers’ references when writing contracts to ensure they have ample experience. Be certain the remodeler has the skills and knowledge to complete your project.
Legal Considerations for a Remodel Contract
The legalities surrounding bathroom remodels cover a wide range of elements. First, the contract should clearly outline the nature of the work, including the scope or limit of the project. The buyer and seller should understand the limits of the project before it begins to ensure the best results.
Second, the contract should encompass any local regulations or permits that may need to be secured before any work can begin—instead of pushing this topic away from the contract and into a separate proposal. If permits are required, timeframes for how long the acquisition could take, along with who will be responsible for getting that permit, can be identified in the details to further protect both parties.
The contract can also outline payment structure and terms, including how and when the contractor will be paid for services and what penalties will result if deadlines or obligations are missed. In addition, if the contract ends up requiring changes at any time, details about how change requests are to be processed, who is responsible for which costs, and how additional time or costs will affect the payment schedule can all come into play.
Advantages of a Remodel Contract Template
A remodel contract template can save you time. It is likely that each remodel will include certain common provisions. In many cases, you will not need to make changes to those provisions especially as they relate to the details of how the work will be performed. But every remodel is unique requiring special attention to certain aspects of the work, special timelines and other things that make that particular project unique. It can be a real time saver to have some of the typical provisions already at your fingertips. You can compare what you have drafted to language that is part of the template. You can use the template provision as is or you can modify it if the situation warrants. That minimization of time (and money) is a definite advantage to having a template for remodel contracts.
Consistency in your bathroom renovations is highly desirable. If you are doing multiple renovations with the same client , or the same general contractor, you will want to use the same language for similar issues. That consistency in language makes it more likely that you will be protected in the future. That protection will also extend to holding the client accountable to its payment terms. This can be true even for renovations involving different general contractors. It tends to let the general contractor and owner know what to expect, including what is not acceptable. Having a template for remodel contracts can facilitate this consistency as well.