Creating a Contract with Your Contractor

Are you getting ready to hire a contractor to perform some work on your home before you put it on the market? If so, it is essential for you to have a contract in place before any money exchanges hands. But, do you know what kind of information should be included in your contract? Although every situation is different, there are a few essentials that you should insist upon being included in your contract before you sign it and allow work to begin.

Some Basic Information

It may sound obvious, but many homeowners proceed with a contractor without having some of the most basic information included in the contract. Some of the basics that should be covered regardless of the project include:

· Contractor's name
· Contractor's mailing address
· Contractor's physical address
· Contractor's phone number
· Your name
· The location of the job site
· Your address
· The current date
· Estimated start and completion date

By including these basics, it is clear where and when the job should start and how each party can get in contact with the other whenever necessary.

Covering the Costs

In addition to including information about the basics, your contract should also include plenty of information regarding how and when the contractor will be paid. Namely, the contract should include:

Estimated cost of the job
Payment schedule

The payment schedule included within the contract should be a schedule that you have discussed with the contractor and you have both agreed upon. In addition, this section should be quite detailed and clear. For example, you may agree to pay 1/3 of the cost before the job is started, 1/3 halfway through completion and another 1/3 when the job is complete. Regardless of how your payment schedule is set up, however, be certain to keep track of the payments you have made and never pay in cash. In addition, never make the final payment until after you have inspected the work and are satisfied with the end result.

Keeping Yourself Protected

There are also several things that should be included in your contract in order to keep yourself protected. Some of these include:

Release of lien clauses - provides you with copies of lien releases after the subcontractors get paid
Written warranty - provides names and addresses of those providing warranty coverage as well as the limitations and the length of the warranty
Dispute resolution clause - provides information regarding how problems will be resolved when they occur
Right of rescission - makes note of the Federal Trade Commission's right of rescission clause, which allows homeowners to back out of a contract within three days after signing without any repercussions
Inspection failure clause - stipulates that the contractor must make any necessary corrections at no cost to the homeowner if the work does not pass inspection
Proof of insurance - your contractor should have personal liability, automobile and workman's compensation insurance in place and should provide you with proof of this coverage

In addition to having these legal documents in place, your contract should also clearly state the duties the contractor is expected to perform as well as include a list of materials that are to be used on the job. The list should be very specific in order to ensure the materials you have requested and utilized. Remember, the more specifics you include in your contract, the better protected you will be!


About the Author:
Shannon Kietzman is a well known author and trusted resource. Shannon regularly writes for http://www.byownermls.com/, a For Sale By Owner MLS service, the leading real estate search engine of homes for sale by owner (FSBO). For more information, please visit http://www.byownermls.com/.