🔨 CONSTRUCTION CONTRACT: Key Provisions, Inclusions, Limitations, and Exclusions Every Homeowner Should Know
- Gabriel Mikael
- May 30
- 2 min read
A construction project is a significant investment—whether it’s building your dream home or completing a renovation. That’s why your construction contract should do more than just outline the price. It must clearly define responsibilities, timelines, materials, and more.
In this post, we break down the essential parts of a construction contract—so you can protect your investment and avoid costly disputes.
📑 What Is a Construction Contract?
A construction contract is a legally binding agreement between the property owner and the contractor. It outlines the scope of work, terms of payment, timelines, responsibilities, and legal remedies in case of breach.
✅ Key Inclusions in a Construction Contract
Here’s what a well-drafted contract must include:
Scope of Work– Detailed description of the project, including architectural plans and engineering specs.
Project Timeline– Start date, milestones, and target completion date.
Cost and Payment Terms– Total cost, payment schedule (e.g., down payment, progress billing), and mode of payment.
Materials and Specifications– Type, quality, and brands of materials to be used.
Warranties– Coverage for workmanship, structural integrity, and materials.
Change Order Procedure– Process for approving additional work, pricing, and schedule adjustments.
Termination Clause– Grounds and procedure for cancelling the contract, either by the client or contractor.
Dispute Resolution– Mechanism for handling disputes (e.g., mediation, arbitration, court).
Retention Clause– Typically 10% of each billing is withheld until project completion as a quality guarantee.
Punchlist and Final Acceptance– Procedures for turnover, inspections, and acceptance of work.
⚠️ Common Limitations to Watch Out For
Construction contracts often include limitations, such as:
Limited Liability: Caps the contractor’s responsibility for damages or delays.
Force Majeure: Protects both parties from liability due to uncontrollable events (e.g., natural disasters).
Subcontractor Clauses: Limits your control over who actually works on the site.
Time Extensions: May allow the contractor to extend the schedule for weather, material delays, etc.
🚫 Typical Exclusions in a Construction Contract
Be cautious of exclusions that shift risk or cost to the owner:
Permit Fees and Taxes: Some contracts exclude these unless stated otherwise.
Soil Issues: Unexpected ground conditions may not be covered and become your expense.
Utilities Connection: Power, water, and sewage hook-ups may be excluded.
Design Revisions: Changes requested mid-project might not be covered unless included in a change order.
Third-Party Damages: Damage to neighbors' property may not be covered by the contractor.
🛡️ Pro Tips Before Signing
Review Everything in Writing – Verbal promises mean nothing without a written clause.
Request a Breakdown of Costs – Know what’s included in the total contract price.
Consult a Professional – Have a lawyer or construction consultant review the agreement.
Check Insurance Coverage – Ensure the contractor has liability and workers’ compensation insurance.
🏠 Build with Confidence
A well-structured construction contract is your first line of defense against delays, hidden charges, and disputes. Take time to understand every clause—what’s included, what’s limited, and what’s excluded.
Comments