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Home Construction Contract: Buyer Beware

Before a licensed Contractor begins the work of building your dream home, you first have to sign a construction contract which will define the specifics of what the Contractor will be required to do.

And unless you yourself are an expert on building a home in Tallahassee, then it is likely the new home construction contract will be totally foreign to you.

And therein lies the problem that creates bad feelings, distrust, and 90% of all horror stories between home builders and their clients. But it doesn't have to be this way.

Construction Contract Between You And The Builder

When it comes to building a home in Tallahassee and beyond, I seek the advice of the best Contractors in the market.

Today, I've asked Lenny Brantley, of Brantley Custom Homes, to share his thoughts on the construction contract and what should be done to eliminate the problems that usually occur from a poorly drafted agreement between the Contractor and the home construction client.

Home Home Construction ContractMe: Lenny, why do you think most problems occur between Contractors and their clients?

Lenny Brantley: When it comes to having a contractor build a home, the contractor works for you. The Contractor runs the job but ultimately you are the boss. Whatever you want, it is the Contractors job to make it happen. There may be change orders or overages involved, but if the original contract covers how each will be handled, then there should be no problems between the Contractor and the client. I say this to empower the Owner with knowledge of how to handle the situation if they feel they are being taken advantage of unfairly.

Me: So a good construction contract will address change orders (changes and additions made by the client as the project progresses) before they occur, so the client knows the costs involved?

Lenny Brantley: Exactly. The details in the construction contract are the difference between a happy client and an upset one, and the specifications in the contract are not to be taken lightly. When you sign a construction contract, you are bound by what has been laid forth in the documents and should research them vigorously.

Me: It sounds to me as if you are saying some people just blindly sign an agreement with a home builders.

Lenny Brantley: When a client does not do their due diligence, it puts everybody in a very bad position. The Contractor believes that he has met all of your expectations only to find out during construction that you as an owner never really understood what you were signing. This is usually where the problems start.

Me: So how does somebody who is building their first home ensure that they do their "due diligence?"

Lenny Brantley: The Contractor you hire has hopefully had enough experience in building or renovating homes that it is second nature to them but if they are not given the correct expectations then there is a disconnect between dreams and reality.  One of my main things I try to to convey to clients is that I have done this over 100 times. I am not trying to sound trite but I know how to build or remodel a home, and my construction contract covers issues that most clients would never even consider. While the small specifications are totally foreign to most customers, It’s not hard for me because it’s my job.

Me: It sounds to me like you're saying there becomes an element of trust, so choosing a Contractor to build your home should involve a thorough screening and significant due diligence in its own right.

Lenny Brantley: Where most Contractors run into problems is when a client does not verify or understand the specific terms of the construction contract. As the home is being built and the details physically emerge, customers might want significant changes (which often cost a lot of money). This is where people get upset.

Me: So basically, people "signing blindly" causes them to overlook details in the contract that might not be what they really want.

Lenny Brantley: Precisely. The best advice I can give is the same any Attorney would tell you ... don’t sign anything unless you are completely comfortable and fully understanding of the document you are about to sign. Believe me, every experienced Contractor has encountered this. Contractors know how to build a home, but you are the boss. You set the parameters, and we deliver what you hire us to build based upon the terms of the construction contract.

Drafting A Better Construction Contract

Whenever we assist somebody who wants to build a home, we use a process that includes both the construction contract desired by the chosen home builder as well as language provided by a real estate attorney.

Each construction contract is unique in that no two homes are exactly alike, so I think it is crazy that you don't ensure the correct provisions are built into the agreement to help resolve issues as they arrive. Remember, the Contractor will be building a large, three dimensional home from a two dimensional plan. As the new home begins to emerge, it will likely be somewhat different than you might have envisioned.

A well-prepared agreement will allow you to modify the home without completely changing the scope of the project, thus it will save you a lot of money and heartache. Building a home should be exciting and fun, so make sure you don't skip the important "due diligence" step that ensures your satisfaction.

If you would like help building a home in Tallahassee, just drop me a note and we can schedule a time to talk about the process from beginning to end. We'll address lot selection, builder selection, planning and design, and of course, how we help you execute the perfect new home construction contract.

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