5 Mistakes to Avoid in Construction Contracts

October 20, 2017 | Bill Henry

Contractors shaking hands

A strong contract provides protection for both you, the contractor, and for your client. It also helps foster trust in the contractor-client relationship by removing uncertainties and establishing transparency up-front. While creating this document might seem tedious and unnecessary, it’s the best way to document everything you and your client discuss, including all the terms agreed upon, prior to starting a job. Contracts may vary in length and content, but certain criteria are required by federal and Colorado state law for all residential roofing and home renovations contracts. It’s critical that you avoid these mistakes to ensure compliance with Colorado statutes.

  1. Skimping on the scope of work. Your scope of work should include a detailed, itemized list of the work, products and materials to be provided and their costs as well as estimated dates of service and a payment plan. Be clear and direct in your word usage and avoid ambiguous phrasing in order to avoid multiple, conflicting, interpretations. This is also your opportunity to explain any standards, regulations or special contract requirements.
  2. Neglecting to include critical licensing, insurance and contact information. Make sure to include your own contact information as well as that for your liability and workers’ compensation insurance. C.R.S. § 6-22-101 et seq requires this information for residential roofing contracts. Also list where you received your licensing. Including this information also increases transparency and helps build trust.
  3. Overlooking information about changes or cancellation policies. Change is inevitable and so it’s important to describe your policy for handling changes to the scope of work. Include terms and provisions to protect yourself from unexpected work and additional costs. Include your policy regarding cancellation of contract and refund of any deposit. It’s also a good idea to specify how you’ll resolve any disputes and claims.
  4. Not informing your client of their right to cancel within three days of signing the contract. Colorado state law requires home improvement and roofing contracts must inform the client of their right to rescind the contract, for any reason, within 72 hours of signing for a full refund of any deposit.
  5. Forgetting to get a signature! In order to enforce a written contract, you need to have the signature of the client. Otherwise, the “contract” may just be considered a writing memorializing an oral agreement. Ensure both parties have a signed hard copy of the contract before the project commences.

The best way to ensure your client contract is compliant with all state and federal laws is to work with an attorney. He/she will help you avoid these and other common mistakes. Remember, a strong contract is the first step in a positive experience for both you and your client. If you have additional questions about developing a strong contract or would like an assessment with an attorney, call 303-688-0944.

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