What to Include in Contracts for Contractors

We’ve all heard horror stories of contractors who caused serious damage, then left the property owner holding the bag. Just as great fences make great neighbors, great contracts for contractors make great business relationships.

While the idea of a contract may seem daunting, it’s really just an agreement to ensure both parties understand the expectations of the work. A good contractor contract can be as simple as a brief written agreement in plain English.

Why Have a Contract?

When dealing with contractors, we use contracts to avoid misunderstandings. Verbal discussions are useful, but a signed document removes all room for miscommunication.

A contractor contract is just a way of knowing what we’re paying for, how much we’ll pay, and how long it will take. When problems arise, the existence of a signed contract most often settles any disputes quickly, without the need for lawyers. Beyond disputes, contracts are a great way to ensure high quality work from the outset.

What Should a Contractor Contract Contain?

A contract between a contractor and a property owner won’t do its job unless it covers a few key areas of concern. The best contract should include the following.

Job Scope. The contract should outline the scope of the job, including the specifics of the work the contractor will perform. This ensures a clear understanding of duties and expected results.

Price and manner of payment. Explicitly state the price in the contract, as well as the method and timing of payments. Include an itemized list of materials to provide additional security.

Completion Time. The contractor should know the project’s timetable. For more complex jobs, the contract can contain an estimate of different phases of completion.

General Provisions. This section of the contractor contract defines general quality expectations. These can include completing the job in a workmanlike manner, complying with building codes, licensing of workers, contractor insurance, permits, and other concerns.

Parties Involved. Include names and addresses of both the owner and the contractor.

Signatures, Dates. These bind the contractor and owner to the agreement by law.

Should You Hire a Lawyer?

A simple homemade contract for contractors, or one adapted from the internet is a great place to start. That said, lack of legal knowledge can render our good intentions invalid if things come down to a dispute. A good real estate lawyer will evaluate a contract for around $100-$200.

Sample Contracts for Contractors

You can find dozens of sample contracts for contractors online for free. Some come from real estate law firms while others are hosted on university websites. Here’s a list of sample contracts you can adapt to your needs.