Types Of Contracts That Your Home Builder May Ask You To Sign

When you have made an agreement with a home builder in regards to the construction of a house, you will both need to sign a contract that outlines each of your responsibilities for the duration of the project. The contract will also include what costs are associated with the contract, when construction is expected to be finished, and what to do in case a problem arises.

  • Fixed Price: This is the most common contract out there; the homeowner will have worked with an architect to come up with the plans for the house and they will then ask builders to provide a quote for the work.
  • Cost Plus: Also known as a time-and-materials contract, this document involves the homeowner paying for the price of materials and the costs of any labour. They will also pay the home builder a little extra so that they can profit from the project (this can make the project run slowing).
  • Design Build: This contract is probably the least popular; it involves the homeowner hiring either a builder or an architect and then authorizing this person to hire a designer or a contractor to undertake the work.

Whilst most home builders will simply request you to sign a fixed price contract, as it provides the easiest means of breaking down the costs of construction, you may come across the odd one who prefers to work with cost plus or even design build contracts. When signing up a builder for constructing your brand new home, make sure that you are happy with the contract that they use.

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