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Contract Basics

Chapter 2: Make it Legal

Get it in writing.

While most people would like to be able to handle decisions with a verbal agreement or a handshake, when you're paying big money for a renovation, you can't always be quite so informal.

If something goes wrong, it really helps to have a piece of paper that spells out who's responsible for making it right again. Here's a guide to working with contracts that doesn't require a degree from Harvard Law to understand.

Negotiating

Lots of people are uncomfortable with this part of the renovation process.

They either have no legal background and are at a disadvantage when it comes to negotiating the terms of a construction contract. Or, they don't want to insult a contractor or damage their relationship with him by implying that they don't trust that he'll do what's right or what's fair without a signed piece of paper.

What's in a contract

What's in a contract? Here's a quick checklist of things that should be in any comprehensive homeowner/contractor contract:
- List of each aspect of the job, and responsibilities for each stage.
- A set of plans signed by both the contractor and the homeowner.
- A payment schedule with a start and finish date and dates for payments to be made at the completion of specific job milestones. This can include a monetary penalty for going beyond a specified date, and a monetary incentive for finishing ahead of schedule.
- A door, window and finish schedule with the names and colors of all materials used.
- A warranty clause specifying time and responsibility for callbacks.
- A clause that specifies who is responsible for payment to subcontractors and suppliers. Plus a release of lien clause. (This states that if the general contractor is paid in full, his subcontractors cannot place a lien on your property in the event that they are not paid by that contractor.) A clause that makes the contractor responsible for obtaining all permits.
- A section that specifies how alterations and change orders are charged. (Insist on having all extras signed by you before the work is performed.)
- A clause for final inspection and sign-off prior to final payment.
- A copy of the manufacturer's warranty for each product.

When things go wrong.

When things go wrong. The entire idea of having a contract is to eliminate opportunities for disputes, so if you've created, negotiated and signed a reasonable contract, when things go wrong it will be obvious to both parties whose responsibility it is to make things right.

But on those occasions where you and your contractor cannot agree on a solution and the contract is not clear, you may have to resort to different forms of dispute resolution. These can include hiring a mutually agreed upon arbitrator whose decision is binding, or a resolution in small claims court.

But again, with a good contract, these actions are seldom needed.

Next : Chapter 3 : Surviving the Noise.

Surviving The Stress of Home Renovations.

Chapter 1 : Keeping The Peace

Chapter 2 : Contract Basics

Chapter 3 : Surviving the Noise.

Chapter 4: The Right Stuff, Not the least expensive

Chapter 5: Living without Utilities

Chapter 6: Deliberate Decisions/Painless Changes.

Chapter 7: Dealing with Dust

Chapter 8: Keeping Track of Money.

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