What to Expect from a Contractor’s Agreement

Your home is a major investment, and few homeowners have the expertise or interest of handling a major repair or renovation project themselves. When the time comes to call a professional, you need to understand the realities of the agreement you’ll be entering. Different than hiring a handyman, plumber, or gardener- big contracts are a more serious business transaction, and in some jurisdictions, may be under the purview of a variety of strict legal guidelines. These guidelines stand to protect both you and the contractor, and must be considered carefully before you sign and agree to have the work done.

What to expect?

• License Requirements – Contractors are required to be licensed and insured. Not only does this nominally enforce a minimum standard of work to be expected but also protects you if something goes wrong. Every state has a licensing board that certifies contractors, so make sure the one you’re about to hire is up to date. Otherwise, you might be working with a contractor who won’t follow codes for safety and could pose a major danger and expense further down the road. Under Pennsylvania law, contractors are required to provide their registration number in both their ads and contracts.
• Deposit Limits – Many contractors will expect a deposit prior to the work beginning. Make sure that your state does not have limits on how large of a deposit the contractor can require. In Pennsylvania, 1/3 of the contract plus the cost of special ordered materials is appropriate.
• Disclosures – Your agreement should include a list of clearly written disclosure prior to starting the project. This will include everything from the scope of the project, the details on what to be completed, the materials to be used, estimated timelines, projected costs, and contingencies if changes need to be made at some point during the project.
• Right to Cancel – One of the most important disclosures is your ability to cancel the project at various stages. Local laws will largely determine your options, but make sure that you feel confident with your options.
• Payment Conditions – Will you owe a total amount on a certain date? Or will you be making incremental payments? Understand the terms of the payment conditions to make sure you can pay for the work you’re having done.

Once you’ve found a reputable contractor, it’s easy to get carried away with the plans for the project itself. Take a moment and carefully examine that contract agreement first: even the best laid plans can find ways to surprise experienced homeowners and contractors alike. The right contract will help protect both parties in these circumstances and can help both parties better underst