Renovation contracts are notoriously difficult to navigate. Here are the most important things to understand, look out for, and include.
4 November 2022
The renovation contract is the homeowner’s bible. Everything you need to know about your renovations should be included in this contract. This contract is an agreement between the homeowner and builder which stipulates a number of details about the job. Every detail in this contract should be laid out in black-and-white so that if any disputes arise you can consult the document for a definitive answer.
There are a number of things covered by a renovation contract. First and foremost is an exhaustive list of all of the jobs to be performed during the renovation period. Renovation contracts will also usually stipulate price. They should also specify time frames as well as the state of the home throughout the renovation (i.e. if the homeowner will need to find other accommodation while certain stages of the renovation are being undertaken).
There are a few other things that are not included in all renovation contracts, but are good practice to protect yourself in the long term. For example, it is a good idea to have a clause which clearly states the compensation rate for delay. This means that if the job drags on for longer than agreed you will have the right to reparations without having to negotiate further. You should also include a liability period of around 12 months whereby anything found to be defective in that time must be replaced at the contractor’s expense.
Renovation contracts are important to get right. Consider it like talking to a genie – you have to be extremely careful with everything that you say lest it be interpreted incorrectly. Likewise, you have to make sure to leave nothing out – you cannot assume that a renovation contractor will include anything you do not specifically mention in the contract. Try to cover all of the bases, and prepare for contingencies as best you can. To help you navigate this minefield, here are a few of the most important things to include.
Most renovation contracts will have a termination clause to protect both parties in the event that the job cannot continue. You should specify the conditions under which you should be able to stop renovations – usually, this will be if work has been significantly delayed, the contractor has ceased work for more than 3 consecutive days, or the work is not up to standard. Contractors may also wish to specify when they can stop working, for example if the payments are not up to date.
This clause will help with mediation in the event that there is a conflict. You need to decide pre-emptively how to handle a dispute, whether it is through the case mediation panel or other means.
This liability period will help you to get compensation if there are problems with any of the renovations after they have finished. Generally contractors should give you a warranty of about a year. You need to negotiate with your contractor the period of warranty, the date that it will commence, what it covers and anything that is excluded from warranty.
Another important thing is to codify the communication that you will have with the contractors. This is where you will decide how often they need to update you on the process, and in what medium (e.g. verbal or written).
Occasionally your renovation professionals may choose to hire subcontractors for jobs that they cannot complete themselves. You should stipulate that they need your written permission to do so. The renovation professionals should also be in charge of managing their sub-contractors – not you. Where possible, include the responsibilities and liabilities of the subcontractors in the contract itself.
This is probably the most important part of the contract. You need to agree on the payment condition – particularly the total sum negotiated by the homeowner and builder. This will protect you in the future if the contractors attempt to charge you more than your quotation. You also need to agree on a payment timeline, medium and schedule. Most people opt for an instalment plan Singapore, paying fortnightly, weekly or monthly.
You need the contractors to outline the different stages of renovation and what you can expect as you move through each. This means things such as noise level and habitability – if there will be a period where you cannot be in the house, you need to know exactly when and for how long that will be.
This follows on from the stages. Setting a firm timeframe with your renovation professionals will help you get a clear idea of how long your life will be disrupted for. You will need to negotiate and agree on a definitive time frame.
After deciding on a time frame, it is imperative to include a clause in the contract which specifies the reparations you can expect for delayed work. This will help you pay for accommodation elsewhere (if needed) as well as the inconveniences of not having your home be construction free when expected. Most contracts will also include a clause which specifies that the contractors are not liable to compensate you for delays outside of their control.
This will be the most extensive part of a renovation contract. This description should include every detail of work that you expect the contractor to undertake. It can be quite tedious, but you need to be utterly thorough to ensure no miscommunications. The scope should include a comprehensive list of all the labour and materials expected to be used throughout the entirety of the renovation project.
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