Using a General Contractor Agreement by Belle Wong, J.D.

Using a General Contractor Agreement

Thinking about hiring a general contractor to handle your latest home remodel? Read more to learn about general contractor agreements—to protect you and your considerable investment.

by Belle Wong, J.D.
updated February 07, 2020 · 3 min read

If you're planning to hire a general contractor to handle the remodeling of your home, it's important to take the time to put together a detailed general contractor agreement. Once the contract has been signed, it's a binding legal document that will go far to help prevent conflicts that might otherwise arise.

Contractor standing in unfinished house and showing floor plan to couple while wearing tool belt

A reputable contractor will not balk at signing a general contractor agreement with the owners of the home that the contractor will be remodeling. If the person you're considering hiring to act as the general contractor for your home remodeling project is resistant to signing an agreement, it's definitely time to start looking for another general contractor.

The Standard General Contractor Agreement

A general contractor agreement basically sets out the legal rights and obligations of the homeowner and the general contractor. Essential terms that should be in the agreement include the following:

  • The general contractor's details. These details should include the general contractor's name, place of business, phone number, and license number.
  • Detailed description of the work to be done. The work that will be done needs to be described in full detail. While you might think certain details are too minor to be included, setting out even the smallest details in writing helps clarify what the general contractor is responsible for.
  • Schedule or timeline. After discussions with your general contractor, you should have an idea how long the work will take. Use this information to come up with a timeline for when certain parts of the project will be completed.
  • Payment schedule. Your agreement should set out not only the total amount to be paid, but also a breakdown of when partial payments will be made. These payments are usually dependent on completion of various parts of the project, and should be set out in full detail in your agreement.
  • Permits and authorizations. Most home remodeling projects will require building permits or other municipal authorizations. Additionally, general contractors are often required to meet certain licensing, bonding, and insurance requirements. Your agreement should state that your general contractor is responsible for obtaining permits and meeting any state or local requirements.
  • Project changes. A section of your agreement should deal with how project changes will be handled. Since you don't want to end up facing unexpected costs due to a change your contractor wants to make, it's important to stipulate that any changes will require your written approval.
  • Termination clause. You do not need to have a separate general contractor termination agreement. Instead, include in your general contractor agreement a section that sets out the conditions under which either you or your general contractor can terminate the contract.

While these are some of the essential terms that should be included in your contract, a search online for sample general contractor agreements should give you ideas as to other terms and conditions you may want to incorporate into your general contractor agreement.

General Contractor-Subcontractor Agreement

Most general contractors hire subcontractors to help them with remodeling projects, so it's quite likely that yours will, too. You may have heard horror stories about subcontractors later looking to homeowners for payment when the general contractor fails to pay them.

At first glance, you might be thinking you should be putting together a general contractor and subcontractor agreement, rather than one that covers only your general contractor. However, because it is your general contractor who hires the subcontractor, the legal agreement that applies in those situations is between them, rather than between you and them.

This doesn't mean you can't protect yourself, though. There are a number of methods you can use to make sure that subcontractors have recourse to your general contractor only, and not you, for any compensation they may be owed.

For example, you can stipulate in your general contractor agreement that all subcontractors hired by your general contractor must sign lien releases or waivers. This means that the subcontractors waive their right to place a lien on your property if the general contractor fails to pay them.

When you're starting a home remodeling project, it is both an exciting and chaotic time. Don't add to your stress by beginning the project without a detailed general contractor agreement. You may want to consult with an attorney, or engage an online service provider, to produce the agreement. Having a general contractor agreement that addresses the many issues that can arise will help to reduce the potential for conflict and provide you with protection against shoddy work and unreasonable delays.

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Belle Wong, J.D.

About the Author

Belle Wong, J.D.

Belle Wong, J.D., is a freelance writer specializing in small business, personal finance, and marketing topics. Connect … Read more