Questions to Ask Before Signing a Construction Contract
A construction contract is not paperwork. It is the operating manual for the next chapter of your life, and it is the only place the two of you have written down what you actually agreed to.
Most disputes between homeowners and builders are not about bad faith. They are about two people who each believed something different, and a contract too vague to settle it. Below are the questions worth answering before you sign — not legal advice, but the practical ones that decide how a project runs.
Scope: What Am I Actually Buying?
The contract should point to a specific, dated set of plans and a written specification. Not "plans provided by owner." The actual revision.
Ask:
- Which plan set and revision date does this contract reference?
- Is there a written scope or specification attached, and does it list what is included by category?
- What is specifically excluded? This is the most important question in the document. Common exclusions: site work, final grading, driveway, landscaping, irrigation, utility tap and connection fees, window treatments, appliances, low-voltage and security wiring, gutters, mailbox, and permit fees.
- If something is not mentioned anywhere, who pays for it?
That last question deserves a real answer. A contract that goes silent on unmentioned items is a contract that will get argued about.
Allowances: Where the Budget Usually Breaks
An allowance is a placeholder for something you have not chosen yet — tile, lighting, plumbing fixtures, appliances, flooring, countertops. It is a legitimate tool. It is also the easiest way to make a bid look lower than the project is.
Ask:
- Which categories are allowances, and what is in each?
- How was each allowance amount set? Was it based on current local pricing and something like what I said I wanted, or was it a placeholder?
- Does the allowance cover material only, or material plus labor and installation? This distinction changes the number substantially and is frequently left ambiguous.
- What happens if I come in under the allowance? Do I get the savings, or does the builder keep it?
- When do I have to make each selection?
Walk into a showroom before you sign and price what you actually like. If your taste does not fit the allowance, you want to know that now, while it is still just a number on a page.
Change Orders: How Changes Get Handled
Changes will happen. Some you will request, some the house will force. The process matters more than the fact.
Ask:
- Is every change documented in writing before work proceeds?
- Will I see the cost impact and the schedule impact before I approve?
- How does the builder's fee apply to change order work?
- What happens when the change comes from an unforeseen condition rather than from me?
- Who is authorized to approve a change — and is a conversation with a crew member enough to trigger one?
The correct answer to the last one is that only you can authorize a change, in writing. Verbal changes are how budgets get away from people.
Payment Schedule: Where the Money Goes and When
Payments should track completed work, not the calendar and not the builder's cash needs.
Ask:
- What is the deposit for, specifically, and what does it buy?
- Are draws tied to defined milestones or completion stages?
- What documentation comes with each draw request? On a cost-plus job, you should see actual invoices.
- How is retainage handled, and what releases it?
- How does the payment schedule coordinate with my construction lender's draw inspections?
- Will I receive lien waivers from subcontractors and suppliers as they are paid?
Lien waivers are worth insisting on. If a subcontractor is not paid, the claim can attach to your property even though you paid the builder. Waivers are the paper trail that protects you.
Who Holds the Schedule?
Somebody has to own the sequence. If nobody does, everybody waits on everybody.
Ask:
- Who builds and maintains the schedule, and will I have access to it?
- How is a delay defined, and how are delays communicated?
- Which delays are excusable — weather, inspection backlog, supplier failure — and what happens to the schedule when one occurs?
- What are my decision deadlines, and what is the consequence of missing one?
- How many other active projects will the builder be running?
That last one is a fair question and you should get a straight answer. A builder's attention is a finite resource.
The Boring Sections That Matter
- Insurance. Confirm general liability and workers' compensation, and ask for the certificate to come directly from the agent. Then check with your own insurer about a builder's risk policy and who carries it.
- Warranty. Ask what is covered, what is excluded, how a claim is submitted, and how manufacturer warranties on products and equipment get transferred to you. Get the terms in writing rather than a verbal assurance.
- Permits and inspections. Who pulls them, who pays for them, and who schedules inspections.
- Substantial completion and punch list. How completion is defined, how the punch list is generated, and what triggers final payment.
- Dispute resolution. Mediation, arbitration, or court. Know before you need it.
- Termination. Under what conditions either party can end the agreement, and how costs are settled if that happens.
Read the Fee Structure Until You Can Explain It
Whether the contract is fixed-price or cost-plus, you should be able to describe in one sentence how the builder gets paid and what makes that number go up or down. If you cannot, ask again. If it still is not clear, that is information.
Under cost-plus, you should know exactly which costs are project costs and which are the builder's overhead, how the fee is calculated, and whether the fee moves when project costs move. We explain our own structure on our cost-plus contracting page and compare the two models in cost-plus versus fixed-price.
One Practical Rule
Do not sign a contract that outruns the plans. If the drawings are incomplete and the specification is thin, the contract cannot describe the project accurately, and every gap in it becomes a decision made later under pressure.
This is the whole argument for doing structured preconstruction first. When the scope is defined, the selections are made, and the budget is built line by line from real trade pricing, the contract becomes a summary of things you already agreed on rather than a negotiation about things nobody has thought through.
If you want a rough range before you get that far, run our cost estimator. If you want the real number, that comes from preconstruction. You can see the full sequence on our process page.
Take the contract home. Read it twice. Have an attorney look at it if the project is significant. A builder worth hiring will expect you to, and will answer every one of these questions without hesitating.
Morreau Construction · (270) 816-4959 · ryan@morreauconstruction.com