It's in the Details: Critical Elements to Have in a Home Improvement Contract

You've decided to make some repairs or renovations on your home, and you've already done your homework and selected a reputable contractor to do the work. Now you and your contractor need to document the details of your arrangement in a legally binding contract.

Signing a contract can be quite intimidating if you don't have a lawyer on hand to guide you along. Perhaps it's this intimidation factor that leads people to not read their contracts thoroughly. They see legalese and their eyes glaze over. They sign the contract without reading it, assuming that the terms are fair.

Not reading a contract in its entirety can be a costly mistake, as you may end up being bound to terms that aren't in your best interest.

Other homeowners try to be diligent and read the contract, but find that they just don't understand what it says. The terminology is too technical or the stipulations too vague, so they just sign, hoping that everything will all work out. To avoid getting shafted, make sure that you understand each point in the contract completely. If you don't understand something, consult a lawyer who can give you unbiased advice.

Home improvement contracts don't have to be complicated, but they do need to be detailed. Vague contracts are not good, as they leave items open for interpretation. When dealing with such large sums of money you don't want to take any chances.

The whole purpose of a home improvement contract is to list which tasks each party is responsible for, what consequences there'll be if someone fails to meet their obligations, how long the job will take, and how much money will be changing hands. A contract protects both parties from being taken advantage of, and ensures that you're both on the same page.

Some of the most vital components you need in your home improvement contract are as follows:

- The contractor's mailing as well as physical address, full name, and phone number. Your contact information is required as well.

- A detailed estimate of the work, including cost. You want to list the brand names of all materials to be used, as well as their description. If you neglect to do this, the contractor may instead use poor quality materials that are cheaper to buy. The more detailed your project scope is, the more you'll be protected.

- Dates for when the work is slated to begin and when it will end. If you're concerned about the project going overtime, you can include consequences that the contractor will face if the work goes past the projected end date.

- Details about how and when the contractor will be paid. It's prudent to put down a 10% deposit in the beginning, and then pay as soon as each phase of work is completed. If you pay before the work is done, you risk having the contractor skip town. If you don't pay quickly enough, the contractor may become annoyed, and take his time completing the job.

- Include detailed warranty information such as the length of the warranty, what it covers, and who you can contact to invoke it.

- A commitment by the contractor to obtain all permits and licenses necessary to complete the job. It's also a good idea to make sure that the contractor has liability insurance and Workers' Compensation coverage just in case she gets injured on your property.

- Details about third parties such as subcontractors. You want your contractor to guarantee the workmanship of the people she hires.

- Assign who is responsible for cleaning up the jobsite, as well as how trash will be stored and removed from the property.

- Determine what happens if there's a dispute between the two of you. Deciding how to handle a problem before one arises makes it much easier to deal with during a moment of conflict.