Contracting a home improvement contractor takes some research and preparation

When putting together a contract with the home improvement contractor you selected, don’t let your eyes glaze over. It’s critical to sign a contract that protects your interests and the contractors, complies with state requirements, and helps you avoid future disputes over stated expectations.

State requirements for a contract between a home owner and registered home improvement contractors vary so check with your state licensing board. For example, California requires that if a home improvement project is over $500, there must be a written contract. If the price changes, it must be done with a written Change Order, which is added to the existing contract. Additionally, if the contract states a down payment is necessary before work starts, California states that it cannot be more than a $1,000 or 10% of the contract price, whichever is lower. Maryland law states that a home improvement contract cannot accept more than 1/3 of the cost of the renovation as a deposit.  Massachusetts requires that 14 items it spells out on its Consumer Affairs and Business Regulation website be included in a contract on work that falls into the state’s Home Improvement Contractor Law. Indiana has a consumer protection law called the Indiana Home Improvement Contracts Act, which governs contractors and imposes specific requirements.

While you might find sample contracts on line, it’s wise to compare contracts on authoritative sites. For instance, the Better Business Bureau[1] recommends that your contract contain:

1. a clause stating that the agreement is valid if financing is obtained if you are using a loan;
2. a clause that the work is performed in accordance with all applicable building codes and zoning regulations;
3. terms regarding the permit application;
4. your right to cancel within 3 business days and that the contract is null and void or will be renegotiated if the job uncovers unexpected or hidden problems or damage once work starts;
5. contractor contact information and identification

The type of contract you use depends on whether you are going to have a fixed price or a time and materials contract. A fixed price contract is most common. It prices the overall project and prevents any increases moving forward. It gives the contractor the incentives of finishing the job on time otherwise the costs out of their pocket add up. A time and materials contract bills a homeowner by the hour for labor and materials. It might sound better, but often it’s not because the contractor can keep coming back with additional time and costs since it is subject to change.

When putting that contract together, be sure to set a timeline and get a job description.

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[1] http://www.bbb.org/us/article/home-improvements-480