A poorly written contractor agreement can leave you thousands of dollars over budget and your kitchen half-finished for months. Before you sign anything, you need to understand exactly what protections and details should be in that contract. Here's what separates a binding, fair agreement from a recipe for disputes.
The Scope of Work Section
This is the make-or-break part of your contract. Your contractor should describe the project in granular detail—not "kitchen remodel" but "remove existing cabinets, install 42 linear feet of new cabinetry, install new countertops, and paint walls." Include specific materials, brands, and finishes where applicable. If you're adding a room addition, the scope should specify square footage, foundation type, wall construction, roofing materials, and any electrical or plumbing work.
Any ambiguity here gets interpreted in the contractor's favor during disputes. Ask your contractor to attach photos, drawings, or specifications as exhibits to the contract. For additions running $15,000 to $100,000+, detailed architectural or engineering plans aren't just helpful—they're essential.
Payment Schedule and Total Cost
Your contract must state the total project cost upfront, broken down by phase. A typical payment structure for a $40,000 addition might look like:
- 25% upon signing ($10,000)
- 25% upon framing inspection ($10,000)
- 25% upon drywall/mechanical rough-in ($10,000)
- 25% upon completion and final inspection ($10,000)
Never pay the full amount upfront. Reputable contractors understand this and build payment milestones into their agreements. The final payment should always be held until you've inspected the work and any punch-list items are completed. Avoid contractors who demand 50% down unless they're ordering expensive custom materials with long lead times—and even then, get it in writing.
Timeline and Schedule
State a realistic start date and estimated completion date. For a kitchen remodel, expect 4–8 weeks; a room addition typically takes 8–16 weeks depending on permits and inspections. The contract should specify whether weather delays, permit hold-ups, or supply chain issues extend the timeline, and by how much.
Include language about project pacing. If work stops for more than 10 days without explanation, you want the right to hire another contractor to finish. Conversely, the contractor needs protection if you delay decisions—like selecting tile or paint colors—that hold up progress.
Insurance, Licensing, and Permits
Verify that your contractor carries general liability insurance (minimum $1 million) and, if relevant, workers' compensation insurance. The contract should name the insurance company and policy numbers. Ask for a certificate of insurance before work begins.
Clearly state who pulls permits and pays permit fees. For most additions and major remodels, the contractor should handle this, as they're responsible for meeting building codes. Budget $500–$2,000 for permit costs depending on your project's scope and local jurisdiction. The contract should also specify responsibility for inspections.
Change Orders and Dispute Resolution
Projects change. Maybe you find mold during demolition, or you want upgraded fixtures mid-project. Your contract must require written change orders that detail what's being added, the cost, and how it affects the timeline. A simple verbal agreement leads to arguments about whether extra work was promised.
The contract should also include a clause requiring disputes to be resolved through mediation or arbitration before either party files a lawsuit, which saves both you and the contractor time and money.
Warranty and Lien Waivers
Your contractor should warranty their workmanship for at least one year. Material manufacturers typically cover their products separately. Before you pay the final bill, request a lien waiver—a legal document where the contractor and their suppliers confirm they've been fully paid and won't file a claim against your property later.
Finding the Right Partner
If you're shopping for contractors, platforms like Mercoly let you compare and review trusted general contracting providers in one place, making it easier to find someone whose terms align with your needs and budget.
Frequently Asked Questions
Q: What happens if the contractor doesn't finish on time? Most contracts include a daily rate for liquidated damages (typically $150–$500/day depending on project size), which compensates you for the delay without proving actual losses.
Q: Should I sign a contract without a detailed scope of work? No—this is your biggest risk. Insist on specific descriptions and attached plans or drawings before signing anything.
Q: Who's responsible if the contractor damages my property during work? Your contract and their insurance should cover this, but verify coverage limits and exclusions before work begins.
Get your contractor agreement reviewed by a local attorney if the project exceeds $25,000—it's worth the $200–$500 fee.