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Here's How: Builder Contract for New House

James Dulley on

Dear James: We have the rough plans done for our new house and need to hire a contractor. What should we pay attention to in the contract to insure all goes well? -- Meg H.

Dear Meg: We have all heard stories on the news of a contractor getting paid and not completing the job or doing shoddy work with the homeowner holding the bag. Although, by far, the majority of contractors are reputable and honest, it can never hurt to have a very detailed building contract.

Check with the Better Business Bureau, as with any work you are having done, and also with other homeowners that the contractor has worked for. Make sure to see the actual homes and meet the homeowners. Do not accept just a list of two or three satisfied customers' telephone numbers.

Be wary if a contractor asks for a large deposit. Most successful contractors should be financially able to purchase the materials. If they are so tight on cash that they must demand large initial payments, this is not a good omen of things to come.

You do not pay your hairdresser before your styling is done. You normally do not pay for your dinner at a restaurant before the food is served and you found it to be edible. Your contractor should be the same.

It is usually a wise investment of several hundred dollars to have your attorney review your construction contract. Also make sure the building plans are completely finished and all of the construction specifications are detailed before signing the contract.

Some state laws allow contractors to request a deposit at the time the contract is signed. There are legitimate payment requests by a contractor. If you select custom cabinets or fixtures that are not returnable, then the contractor may reasonably ask for some cash to cover the cost of these unique items.

If your contractor requests a cash advance before starting the job or at various stages, ask how the amount is determined and what it is for. People sometimes end up advancing more money than is needed at various stages of construction.


In your contract, you may agree to pay biweekly or monthly for work that is satisfactorily completed. If you choose this approach, have the contractor include a cost breakdown of the various stages of construction. This will help you to gauge if the regular payment amounts are reasonable.

The following is a typical percentage breakdown of the costs to build an average house. You can use these numbers, as many financial institutions do, to gauge the amount of the costs at various stages. The numbers add up to 100%: excavation, 2%; sewers/septic, 3%; footings, 2%; foundation, 13%; floor joists, 4%; subfloors, 2%; stud walls, 2%; wall sheathing, 2%; roof rafters, 4%; roof sheathing, 2%; roof shingles, 2%; windows/doors, 3%; siding/brick, 4%; room partitions, 3%; plumbing, 9%; electrical, 4%; heating/air conditioning, 6%; insulation, 1%; drywall hanging/finishing, 6%; basement floor, 2%; hardwood floors, 1%; interior trim, 3%; interior doors, 2%; cabinets, 2%; appliances, 1%; kitchen/bath flooring, 2%; indoor/outdoor paint, 2%; interior decorating, 2%; carpeting, 2%; garage, 1%; gutters/downspouts, 1%; driveway/sidewalks, 3%; landscaping, 2%.

Don't feel embarrassed to discuss the payment schedule with your contractor. If he or she is reputable, they will not be offended by your concerns. They will probably be impressed that you have done your homework and may be more careful. Visit the building site often, even if just for a couple of minutes to show you are watching.


Send your questions to Here's How, 6906 Royalgreen Dr., Cincinnati, Ohio, 45244 or visit www.dulley.com. To find out more about James Dulley and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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