Would you hand a complete stranger fifty thousand dollars based on a pinky promise and a grainy photo of a kitchen they supposedly built in 2019? A total gamble. You sign a piece of paper that looks official but covers nothing. Most homeowners don’t realize that a bad contract is actually much worse than having no contract at all. It’s scary.
Truly! I’ve been reviewing these documents for decades, and the actual reality of the situation is that most people sign their own financial death warrants without even blinking. There’s many contractors out there—good people, mostly—who simply aren’t great at paperwork. Between you and I, if the contract is vague, the person with the most money usually loses the loudest. You have to be your own first line of defense.
Defining the actual…
The scope of work. It needs to be incredibly detailed. I have seen people lose thousands because they didn’t specify the grade of the flooring or the brand of the fixtures. Don’t skip this.
The past history of construction disputes tells us one thing: “industry standard” means absolutely nothing in a courtroom. If you want a specific type of Italian marble, you better name the quarry in the document. Wait, I should—anyway, the point is that if it isn’t written down, it doesn’t exist. Ugh! It makes my blood boil when a contractor says, “We talked about that,” but then charges an extra five grand for it later.
When the money…
A clear payment schedule. Never pay more than 10% or $1,000 upfront as a deposit, depending on your local laws. You want to tie every subsequent payment to a specific, verifiable milestone in the project. Keep the leverage.
Advance forward only when the work is actually done to your satisfaction. If they ask for “material money” three weeks before the materials arrive, they are likely using your cash to finish the last guy’s job. Sheesh! It’s a classic cycle of debt that eventually leaves someone—usually you—with a half-finished bathroom and a disconnected phone number. (Aside: I once had a contractor try to bill me for his own parking tickets during a remodel, which was a new level of audacity even for this industry).
If the schedule…
The timeline for completion. Every contract must have a firm start date and a firm end date. You should also include a “liquidated damages” clause that penalizes the contractor for every day they are late without a valid excuse. Time is money.
Fragmented schedules are common. A contractor might show up for two days, vanish for a week, and then send a text about a “family emergency” that suspiciously coincides with a fishing trip. You need to define what “substantial completion” looks like. Is it when the paint is dry, or when you can actually use the shower? Be specific.
Why the insurance…
Liability and workers’ comp. You must demand to see an up-to-date certificate of insurance before anyone swings a hammer on your property. If a worker falls off a ladder and the contractor isn’t insured, guess who gets sued? You do.
The current status as it stands now regarding your homeowner’s policy might not cover major renovations either. Call your agent. Make sure you have copies of their general liability, workers’ compensation and umbrella policies. Argh! It’s a boring task, but it’s the only thing standing between you and a massive personal injury lawsuit that could cost you your house.
Getting the change…
The change order process. In the middle of a project, you’ll inevitably decide you want an extra outlet or a different light fixture. The contractor will say, “No problem, we’ll handle it,” and then hit you with a massive bill at the end. The devil is in the details.
Stop the madness. Every single change—no matter how small or “cheap”—must be documented in a written change order signed by both parties. This document should list the change in scope, the specific cost, and any added time to the schedule. If they won’t sign it, don’t do the work. It’s the only way to prevent “sticker shock” when the final invoice arrives.
The final walkthrough…
The retainage or “punch list” fund. You should always hold back at least 10% of the total contract price until the very last bit of trim is painted. This is your only insurance policy. It works.
You should just trust the contractor’s word that they will come back next week to fix the scratches.
Once they have 100% of the money, you are no longer their priority. They have a new job, a new client, and a new set of problems to solve. Keep that final 10% in your pocket until the “Certificate of Occupancy” is in your hand and the site is clean. It’s not being mean; it’s being professional.
Handwritten-style note: Check for “Mechanics Lien” waivers! Make sure they sign one for every payment so their subcontractors can’t come after you for the money the General Contractor spent on his truck instead!
