Review Contract Carefully
Your remodel contract is the single most important document in the entire project. It defines what will be built, how much it costs, when it will be finished, and what happens when things go wrong. Every dispute between a homeowner and a contractor ultimately comes down to what the contract says. Take the time to read every word and negotiate every clause that concerns you.
Time Required
4-8 hours (with lawyer review)
Cost
$300-$800 (attorney review)
Difficulty
Hard (legal details matter)
Essential Contract Clauses
Detailed scope of work
The contract must include a comprehensive description of every task to be performed, referencing your design drawings, material specifications, and finish schedules. Vague scope language like "remodel living room per discussion" is an invitation for disputes. The scope should be specific enough that a third party could read it and understand exactly what work is included and excluded. Attach all plans, specs, and material selections as contract exhibits.
Fixed price with clear allowances
The contract should state a fixed total price with itemized costs by category. Any material allowances must specify the dollar amount, what it covers, and what happens if you go over or under the allowance. Avoid cost-plus contracts (where you pay actual costs plus a percentage markup) unless you have an extremely trusted contractor, as they remove the incentive to control costs.
Timeline with start and completion dates
Include a firm start date, specific milestone dates, and a guaranteed completion date. Add a liquidated damages clause that specifies what the contractor pays you per day for delays beyond the completion date (typically $100-$500 per day). Without this, there is no financial consequence for a contractor who drags your 3-month project to 6 months. Also include legitimate delay exceptions for weather, material delays, and owner-requested changes.
Dispute resolution process
The contract should outline how disputes are resolved: direct negotiation first, then mediation, then binding arbitration or litigation. Mediation is typically the most cost-effective and fastest resolution method. Be cautious of contracts that require binding arbitration only, as this can limit your legal rights. Ensure the dispute resolution venue is in your county, not the contractor's, if they are in a different jurisdiction.
Change Order Process
- Written change orders only: The contract must require all changes to scope, materials, or costs to be documented in a written change order signed by both parties before any changed work begins. Verbal change orders are the leading cause of remodel disputes. If it is not in writing, it did not happen.
- Pricing transparency: Change orders should include a detailed breakdown of additional costs: labor hours at a specified rate, material costs at actual price plus a defined markup (typically 15-20%), and any timeline impact. Some contracts include a pre-agreed change order markup rate, which prevents surprise pricing.
- Owner approval required: No change order work should begin without your written approval. The contract should explicitly state that unauthorized changes are not billable. This protects you from a contractor who adds work and sends you the bill after the fact.
- Allowance overages: Define how allowance overages are handled. If you specified a $5,000 flooring allowance and your selection costs $7,000, the contract should clearly state whether the $2,000 overage is paid immediately, added to the next milestone payment, or billed separately.
Warranty Terms to Negotiate
- Workmanship warranty: Insist on a minimum one-year warranty on all labor and workmanship, with two years preferred. This covers defects in how the work was performed: a door that will not close properly, paint that peels, trim joints that open, or a fireplace surround that cracks. The warranty period should start from the date of final completion, not the date of contract signing.
- Material warranty pass-through: Manufacturer warranties on materials (flooring, fixtures, appliances) should be passed through to you with all documentation. Your contractor should provide warranty registration cards, receipts, and installation certificates for every warranted product. Some manufacturer warranties are voided by improper installation, so proper documentation is critical.
- Structural warranty: For any structural work (beam installation, wall removal, foundation modifications), negotiate a longer warranty period of 5-10 years. Structural failures can take years to manifest and are the most expensive to repair. This is one area where you should not accept the standard one-year warranty.
- Warranty service response time: The contract should specify how quickly the contractor must respond to warranty claims (typically 48-72 hours for urgent issues, 2 weeks for non-urgent) and a timeframe for completing warranty repairs (typically 30 days). Without these timelines, warranty service can drag on indefinitely.
When to Have a Lawyer Review
- •For any project over $25,000, always get a lawyer review: A construction attorney charges $300-$800 to review a remodel contract and can identify clauses that put you at risk. This is the best money you will spend on the entire project. An attorney will catch one-sided indemnification clauses, unfavorable dispute resolution terms, and missing protections that you would never notice.
- •Do not use the contractor's standard contract without modification: A contractor's boilerplate contract was written by their attorney to protect the contractor, not you. It is perfectly reasonable to negotiate terms, add clauses, and modify language. A reputable contractor expects this and will not be offended. If a contractor refuses any modifications to their contract, consider it a warning sign.
- •Consider AIA or other industry-standard contracts: The American Institute of Architects (AIA) publishes standard residential construction contracts that are balanced between homeowner and contractor interests. These cost $35-$50 per form and provide a solid starting framework. Your attorney can then customize them for your specific project needs.