If you’ve ever dreamed of owning a home, you likely have an idea of your dream home in mind. You can pour countless hours into finding your perfect home, but it’s unlikely you will find one that has everything you desire.

However, you’ve seen the home improvement shows on TV. Designing your dream home is a perfect option for you. So, you begin a remodeling project.

After you find a contractor and discuss the work you want to be done, they will present you with a construction contract. By their nature, contracts are very technical, and you may not understand everything in them. Here, you can learn all you’ll need to know about construction contracts.

What is a Construction Contract?

Construction contracts outline the details of the construction job being performed. These agreements protect both you and the contractor.

Construction contracts will outline the parameters of the work that will occur, as well as outline a payment schedule for you to follow. Even if you and the contractor disagree on certain aspects of the project, the contract obligates both parties to uphold their end of the agreements set in place.

You should contact a real estate lawyer to help you make sense of your contract.

The Types of Construction Contracts

Construction contracts can be divided into four different types. The type of contract a contractor will use will depend on the client and how they wish to receive payment.

Lump-Sum/Fixed Price

This contract combines the costs of the project into a lump-sum or fixed price. Contractors can be penalized for completing a project after the specified finish date. You are responsible only for the set price outlined in the contract.

Cost Plus

This contract specifies that you are responsible for the cost of labor and materials. The client is also responsible for an additional fee to cover the contractor’s overhead and profit. This type of contract protects contractors in cases where clients omit details that emerge once work begins.

Time and Materials

This contract sets an hourly or daily rate for the contractor. These contracts also specify that clients are responsible for any additional costs that arise during the project. Time and materials contracts may also include a guaranteed maximum price on the project for the client’s benefit.


Contractors typically use this when bidding on projects. Unit-pricing entails a standard price without a markup on costs associated with the project.

What is in a Construction Contract?

A construction contract should detail the following things.

Identifying/Contact Information for Both Parties

The contract should detail your name and the contractor’s name, as well as ways to contact each party.

Description of the Project

The contract should specify what work is being done and detail specifics. For example, if you are remodeling your kitchen, the contract may specify tile work, replacing the sink, and putting in a new stove and oven.

Timeline and Completion Date

The contract should specify the start date of the project and an estimated completion date.

Cost Estimate and Payment Schedule

The contract should outline the estimated cost of the project. Depending on the type of contract, it may also specify a schedule for payment when milestones are met, like tile installation in your kitchen.

Act of God Clause

Some circumstances outside a contractor’s control may prevent them from completing a job on time. An act of God clause accounts for these circumstances, like hurricanes, earthquakes, or a widespread material shortage.

Change Order Agreement

A change order agreement allows either party to deviate from the plans in the contract. As long as a written agreement is signed by both parties, these changes can take effect.


If you are unsatisfied with the quality of work, a warranty will specify a set time after completion where you can request changes.

Dated Signature from Both Parties

Contracts are not legally binding until all parties involved have signed and dated them. If you are a senior citizen (65 and older), as of January 1, 2021, you will have an extended period to cancel certain kinds of contracts.

Real Estate and Foreclosure

If you found this article helpful, please contact the Estavillo Law Group for your real estate law and foreclosure needs. We can help you will construction contracts, neighbor disputes, property and sale agreements, and more. Contact us to set up an appointment.