Construction Contract Review Checklist: What to Look For
Signing a construction contract is a big step, whether renovating, adding to your home, or building your dream home from the ground up. But before you pick up that pen, it's crucial to understand precisely what you're agreeing to, which is where a construction contract review checklist can be handy.
A construction contract isn't just paperwork. It’s a blueprint that details everything from costs and timelines to responsibilities and dispute resolution. Unfortunately, many homeowners rush through the signing part of the process, trusting that everything is in order. But this can lead to misunderstandings, hidden costs, and disputes down the road.
A solid construction contract review can help you avoid pitfalls and ensure your project goes off without a hitch. In this article, we’ll walk you through a comprehensive checklist to ensure you're fully informed before you sign.
Do I need to go over every line in my contract?
The short answer is yes. Construction contracts can be complex, filled with industry jargon and legal terms that aren’t always straightforward.
Without a proper review, you could miss critical details that might lead to unexpected costs, delays, or disagreements with your contractor.
Just imagine discovering mid-project that certain materials aren’t covered or realizing that there’s no clear timeline holding your contractor accountable. These kinds of surprises can turn your dream renovation into a stressful, expensive nightmare. A thorough contract review acts as your safety net, ensuring that every aspect of your project is clearly defined and agreed upon.
Even if you trust your contractor, remember that contracts are designed to protect both parties. Having a clear, detailed agreement helps prevent misunderstandings and sets expectations from the start. It’s not about mistrust—it’s about making sure everyone is on the same page.
The good news is that reviewing your construction contract doesn’t have to be overwhelming or time-consuming. With Protractor, you can review your contract faster and more effectively.
Quick and Accurate Reviews: Protractor scans your contract and highlights critical areas you need to focus on, saving you hours of manual review.
Simplified Explanations: Complex legal terms? No problem. Protractor breaks them down into plain language, so you know exactly what you're agreeing to.
Custom Insights: Get tailored recommendations and talking points, making discussing your contract with your contractor easier.
Peace of Mind: With Protractor, you can move forward confidently, knowing your contract has been thoroughly reviewed.
Construction contract review checklist
This construction contract review checklist will break down the essential components you need to focus on. Taking the time to understand these key sections can save you from future headaches and give you peace of mind as your project moves forward.
1. Project description
Start by reviewing the project description. This section should clearly outline the scope of the work, including specific goals, materials to be used, and any design elements that are part of the project.
It might seem obvious, but even minor ambiguities can lead to big misunderstandings. For example, if you’re getting a kitchen remodel, the contract should detail exactly what’s being installed—right down to the type of countertops or flooring.
Also, confirm that the contract includes the exact location of the project and lists all relevant parties involved, such as designers, architects, or consultants. This ensures accountability and makes it clear who is responsible for each part of the project.
2. Scope of work
The scope of work section is one of the most critical parts of the contract.
It should provide a detailed list of tasks that the contractor is responsible for completing. The more detailed, the better. Vague language like “install fixtures” leaves too much room for interpretation—does that include light fixtures, faucets, or both?
Make sure the contract also outlines what isn't included. This can prevent future disputes over additional work that you assumed was part of the deal. For example, if painting is part of the remodel, the contract should specify whether it includes prep work, primer, and the number of coats.
3. Project schedule
Every homeowner wants their project completed on time, but construction delays are all too common. To protect yourself, ensure the contract includes a clear project schedule. Look for specific start and end dates, along with milestone deadlines for significant phases of the work.
It’s also helpful to understand what happens if delays occur. Does the contract outline how unforeseen issues, like bad weather or supply shortages, will be handled? Knowing this in advance can help you manage expectations and avoid frustration later on.
4. Contract amount and payment terms
This section outlines the total cost of the project. Double-check that the contract amount matches the quotes you received, and be sure it includes all agreed-upon materials and labor.
The payment terms should also be crystal clear. A well-structured contract breaks down the payment schedule, whether it’s a lump sum or progress payments tied to project milestones. It should also specify what percentage is due upfront, how much will be paid at each stage, and when the final payment is expected.
5. Owner’s responsibilities
As the homeowner, you have responsibilities or obligations in a construction project, too. This section of the contract outlines what you’re expected to provide or manage throughout the project.
For example, you may be responsible for ensuring site access, securing necessary permits, or providing utilities like water and electricity during the construction. It might also outline your role in approving materials or design choices in a timely manner.
If these responsibilities aren’t clearly stated, it could lead to delays or disputes if something goes wrong. Understanding your obligations upfront helps ensure that the project runs smoothly and keeps communication clear between you and your contractor.
6. Indemnification and insurance
This part of the construction contract is critical for protecting yourself from liability.
Indemnification clauses detail who is responsible if something goes wrong on the job site, such as property damage, injuries, or legal disputes. Ideally, the contract should specify that the contractor is liable for any damage caused by their team or subcontractors.
Insurance requirements should also be outlined here. Your contractor should carry adequate insurance, including general liability insurance and workers’ compensation. Don’t just take their word for it—ask for proof of coverage.
If they don’t have proper insurance, you could be held financially responsible for accidents or damages that occur during the project.
7. Dispute resolution
Even with the best planning, disputes can happen. That’s why it’s important to have a clear dispute resolution process outlined in your contract. This section should detail how disagreements will be handled (mediation, arbitration, or legal action).
Many contracts prefer mediation or arbitration as a first step since these methods are generally faster and less expensive than going to court. Ensure you’re comfortable with the outlined process and that it provides a fair path to resolving potential issues.
It’s also worth looking into how the contract addresses change orders. You know, those last-minute modifications that can derail timelines and budgets.
A good contract will specify how change orders are handled, including how they should be documented and approved.
8. Termination clause
While no one starts a construction project expecting it to go south, it’s essential to understand your rights if things don’t work out. The termination clause outlines the conditions under which either party can end the contract.
Look for clear language that explains what happens if the contractor fails to meet deadlines, delivers subpar work, or violates the terms of your agreement. It should also specify any penalties or fees for terminating the contract early.
Likewise, understand what happens if you decide to cancel the project due to personal reasons or unforeseen circumstances. A fair termination clause protects both you and the contractor, ensuring that everyone understands their obligations if the partnership needs to end prematurely.
9. Contract documents
A solid construction contract doesn’t stand alone; it comes with supporting documents that provide additional details about the project.
This section should list every attachment included with the contract, such as:
Architectural drawings
Engineering plans
Material specifications
Permits and approvals
Ensure all relevant documents are attached and properly referenced in the contract. Missing or outdated documents can lead to confusion or costly mistakes during the project.
10. Signatures
This construction contract review checklist won’t be complete without discussing signatures. Sure, it may seem obvious, but double-check that all the necessary parties have signed the contract.
This includes the homeowner, contractor, and any other stakeholders who have a role in the project, such as architects or designers.
The signatures confirm that everyone agrees to the terms outlined and is committed to fulfilling their responsibilities. Without proper signatures, the contract may not be legally binding, leaving you vulnerable if disputes arise.
Quick overview of common red flags in construction contracts
Even with a thorough construction contract review checklist, it’s important to keep an eye out for common red flags that could spell trouble down the line.
Here are a few warning signs to watch out for in your agreement.
Vague or incomplete scope of work
Unclear payment terms
No dispute resolution clause
Missing or inadequate insurance
Excessive legal jargon
Spotting these red flags early can save you from major headaches.
How Protractor can help you review construction contracts
Protractor is an AI-powered construction contract review tool designed specifically for homeowners like you. It simplifies the entire contract review process, helping you understand every line of your agreement without needing a legal degree.
With Protractor, you don’t have to worry about missing hidden fees, vague terms, or loopholes that could leave you vulnerable. Protractor gives you the confidence to sign your contract, knowing that you’ve covered all your bases. It’s like having a legal expert in your corner—without the hefty price tag.
Read your construction contracts carefully
A construction contract is the foundation of your entire project. Taking the time to thoroughly review your contract before signing can save you from costly mistakes, misunderstandings, and disputes.
Following this construction contract review checklist will ensure you’re better equipped to catch red flags, ask the right questions, and you and your contractor are on the same page.
And remember: Protractor can automatically review your contract for you, ensuring every detail is understood. Protect your investment and feel confident moving forward.
FAQ
What does a contract review include?
A comprehensive contract review ensures that every detail in your construction agreement is clear, accurate, and serves your best interests. It typically covers:
Project scope
Payment terms
Timelines and milestones
Responsibilities of each party
Insurance requirements
Dispute resolution processes
With Protractor, reviewing your construction contract is straightforward.
Contractor Conversations: For just $99, Protractor provides an automated review highlighting key points and potential concerns in your contract. You’ll receive clear talking points to discuss with your contractor, ensuring everyone is aligned before the project starts.
Expert Review: Need a deeper dive? Alongside our automated review, you’ll gain direct access to a dedicated attorney who can answer your questions in depth and provide professional redlines for your contracts.
How long is a construction contract good for?
A construction contract generally remains valid until the project is completed and all terms have been fulfilled, including any warranty periods mentioned in the agreement. Some contracts specify exact expiration dates or conditions allowing for termination or extension. Always examine the project timeline and any clauses concerning extensions or delays to understand how long your contract will stay in effect.
Do construction contracts expire?
Yes. A construction contract can expire if it includes a specific start and end date or a defined timeframe for project completion. Contracts may also incorporate clauses permitting expiration if the work does not begin within a certain period or if significant delays arise without formal extensions. Make sure your contract clearly details these timelines and any provisions for extensions to avoid misunderstandings.