Don’t Sign Yet: A Homeowner’s Checklist for Construction Contracts to Avoid Costly Mistakes
Author
Saumya Bhargava
Director of Sales and Operations
When you’re ready to build your dream home, a new ADU, or a remodel/addition, the contract with your contractor is your most important document. It’s your plan, your protection, and the foundation of a successful project. But for many homeowners, a construction contract can feel overwhelming.
At Urbatect, we believe in full transparency & educating our clients every step of the way. Based on our decades of experience in the industry, we have prepared this guide to walk you through the essential elements of any construction contract. Following the checklist below will ensure you are fully protected, understand every detail, and avoid costly mistakes and possible disputes down the road.
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1. A Complete Scope of Work is Non-Negotiable
Your contract must clearly define every aspect of the project. If you have already pulled a building permit and have permitted plans from your local jurisdiction, the contract must reference those documents and their building permit number. This ties your agreement directly to the approved plans.
If you’re working on a design-build contract where permitted plans don’t yet exist, be sure to list every specific item you want. For example, if you need aluminum siding, the contract should explicitly state that you want aluminum siding, not just “siding”. Outline cost drivers such as vaulted ceilings (specify ceiling height and the rooms included), retaining walls or hillside work (type, height/length, drainage and engineering), and any custom trusses.
If requirements aren’t specified, you leave the contractor to build to their bid assumptions – which may not match your expectations. By being specific, you ensure that you and your contractor have a shared understanding of what’s included, preventing assumptions and resolving any future disputes before they happen.
What should be included in a construction contract?
2. Define What the Project Is - Explicitly
Don’t sign a vague contract. For example, if you are building a custom home, simply stating “design & build a custom home” is not enough. Your contract should be a precise description of the final services being rendered.
What to do instead: Instead of a generic description, clearly outline: “Design & Build of a 2-Story 5,250 square feet (livable space) Single Family Residence consisting of a 5-bed, 4-bath, multipurpose room, movie theater, loft area, kitchen, dining area, two living rooms, and exterior covered patio & one exterior balcony off the master bedroom. The proposed build will have an attached 750 square feet 3-Car Garage. The total square footage is 6,000 square feet (livable & non-livable).”
This simple step ensures you and the contractor are aligned on the end goal from the very beginning. On the other hand, skipping details may lead to disputes down the road or cost overruns.
3. Understand Exclusions: What Isn't Covered? Know your All in Costs from the Start
Make sure there is a clearly defined exclusion section in the proposal. This outlines what your contractor is not including in their price. Many contractors have standard exclusions they always apply, regardless of the project.
Ask your contractor to walk you through all exclusions so you have a complete picture of your total project expenses (all in costs), including items you will be responsible for. This upfront clarity helps you budget accurately and prevents surprises later.
4. Total Cost & Payment Schedule
All contracts must have the total project cost clearly outlined. This section should also define a progress payment schedule that aligns with the project’s milestones. You should pay only after the milestone is completed and you’ve received the key deliverables.
Never pay for work that hasn’t been done yet. This protects you from paying for work that isn’t progressing and helps keep the project on schedule.
5. Timeline: The Roadmap for Your Project
While it may seem obvious, a proper timeline is essential. Without a clear timeline outlined in your contract, it becomes difficult to hold your contractor accountable for delays. Your contract should include a start date, key milestone dates for different phases of the project, and a projected completion date.
6. Allowances & Finishes: Your Design Details
If your contractor is providing finishes for your project, your contract should have a detailed allowances section. This specifies the dollar amount allocated for finishes like flooring, countertops, and light fixtures. For finishes you care about, ensure the allowance is realistic and covers the cost of what you actually want. Also, clarify if you must choose finishes from the contractor’s specific library or if you have the flexibility to select them from any supplier.
7. Get Everything in Writing
Your contract is your written record of the agreement, but it’s not the only thing you should get in writing. Any changes, amendments, or agreements made during the project should also be documented. Get every change-order request & agreement in writing, with the scope and reason explicitly outlined; via email or a formal change order. Verbal agreements are notoriously difficult to prove in a dispute. Always get it in writing, no matter how minor the change seems.
8. Termination, Cancellation & Disputes
The Urbatect Advantage: A Contract Built for Transparency and Trust
At Urbatect, we’ve built our reputation on a foundation of transparency and trust. We understand that a contract should be a source of confidence, not confusion. Our approach to client contracts is a direct reflection of our commitment to you.
We provide a clear, single contract that outlines every detail of your project from day one. It includes our fixed pricing, a detailed scope of work, and a transparent payment schedule tied to concrete milestones. Our goal is to eliminate surprises and ensure you feel secure, informed, and in control throughout your entire design-build journey.
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FAQs
A detailed scope of work, total cost, payment schedule, timeline, allowances, exclusions, and dispute resolution clauses.
By documenting every agreement, getting changes in writing, and clearly defining project scope, timeline, and payments in the contract.
Allowances specify the budget for finishes like flooring, countertops, and fixtures, ensuring the contractor and homeowner are aligned on costs.
A timeline sets start and milestone dates, holding contractors accountable and helping homeowners plan for project completion.
We recommend using allowances to keep flexibility on finishes while staying within budget: instead of locking every SKU now, set clear allowance amounts (per room or item) and define what’s included. Ask the contractor to support your selections - e.g., shortlist brands, provide samples, and confirm lead times - and clarify whether you’re limited to an approved vendor list or free to buy from any supplier.
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Don’t let the complexities of construction hold you back from building your dream home or ADU. With Urbatect, you get a trusted, full-service partner dedicated to making your vision a reality.
