Contractor forms to sign

[Melissa Faraias]

Hello,

I am a new investor, who is just closing on my first home here in Houston. Exit strategy is Buy & Hold. I have estimates from 4 contractors and hope to finalize one soon. What paperwork should I have the contractor sign before starting the project? I have the detailed line item estimate and the timeline and payment schedule that we will sign but I've been reading on these forums that I should have all my expectations laid out in a document like materials used, penalties for late work etc. Does anyone have any documents that they can share? Thank you so much. These forums have been so helpful to me as I start my journey.

[Evan Polaski]

Similar to Jerry, I don't have a specific document, per se.

You can always consult with an attorney for some basic contracts and hit on items that you may not have thought of.

Be ready to be a babysitter for grownups.  

Areas that tend to lead to trouble:

Clean-up clauses: Add that they need to price in having the job broom swept EVERY DAY before they leave.  If you have multiple subs that you are managing, it becomes a pig sty real quick, and the HVAC guy starts complaining that he can't do his job because the plumber left this huge mess, etc.  

You cannot just have scope of work "tile shower surround".  It should include: install cement board with all seams taped and mortared.  Apply RedGard. Install tiles using mortar backer/or glue, whichever you agree on. Tiles to be laid in herringbone pattern.  

Then who is responsible for final caulk and finish type work.  Sometimes this is tile, sometimes this is painter.

Same with carpentry work.  Some carpenters will come and install all doors/trim molding, and leave every nail hole visible.  Is that work the carpenter or the painter?  What about caulking gaps between molding and wall?

On drywall: are you getting a level 2/3/4/5 finish?  Are they doing drywall returns to your windows?  

Plumbing and electrical: are these fully permitted?  Are they responsible for pulling permits?  I typically tie my draw schedules to these items: some small draw to get started.  Another draw upon passing rough-in.  And final draw upon passing Final inspection.  I push for more than 50% of the total job to be the final draw.  Known trusted contractors, I will vary from that, but new to me contractors, no go.  Need to keep them incentivized to finish the job.

At the end of the day, the biggest piece of advice I can give is: no draws based on percentage work.  That is very subjective.  The more details you put in there, the better.  There should be actual milestones, if there are any draws at all.  As noted, rough-in and final inspections passed.  Drywall hung (pre/tape and mud).  

And be generous with timelines.  Delays will happen.  Is the electrician going to be penalized when the framer isn't done on time?  Or what about an inspector that is booking 2 weeks out, but when they bid the job it was only 1 day out?  This is the hardest balancing act once you have people hired.  You are relying on them, just as much as they rely on you.  Most good contractors are booking out months and will cost more to come finish someone else's job than if you hired them in the first place.  So you need to be understanding and reasonable.