Contracts for Sub Contractors to Sign

[Chris Summons]

Hello BP Community,

Well I am official, I purchased my first house to flip two days ago.  Yay!!!  As I start to look at what sub-contractors I want to use I wanted to see if anyone has a good base template for sub contractors to sign? I really want to have them sign a contract that I can drop in the scope, schedule and proposed fees to provide some protection for me. Anyone have a good base that they are willing to share?  

Thank you so much for your help!!!

[Alberto Rivera]

Hi Chris,

Congratulations on your first flip! That’s a huge milestone—welcome to the exciting world of real estate investing. 👏

Regarding subcontractor contracts, it’s essential to have a well-thought-out document to ensure clarity and protect all parties involved. Here’s a breakdown of the key elements you should include in your subcontractor agreement:

1. Subcontractor’s Information:
   • Full legal name of the subcontractor or company.
   • Contact details (address, phone, email, etc.).
2. Project Information:
   • Internal Project ID or Purchase Order Number (if applicable).
   • Project address.
   • Clear identification of the specific scope they’re responsible for (e.g., electrical, plumbing).
3. Project Timeline:
   • Start Date: For the portion of work they are completing.
   • Completion Date: Set realistic deadlines for their tasks, adjusted to your overall project schedule.
4. Liquidated Damages:
   • Specify a daily amount to be deducted from their final payment if they fail to meet deadlines (with exceptions for factors beyond their control, like severe weather). Tailor these amounts to the significance of the task; for example:
     • Roofer: $1,000/day (critical to weatherproof the site).
     • Painter or garage door installer: $100–$200/day.
5. Contract Value & Payment Terms:
   • Agreed payment amount (lump sum or itemized costs).
   • Breakdown of payment terms:
     • Deposits.
     • Progress draws.
     • Retainage (if applicable).
6. Scope of Work:
   • Be as detailed as possible. Specify:
     • Exact tasks the subcontractor is responsible for.
     • Exclusions.
     • Who is providing materials.
     • Material specifications (e.g., brands, grades).
     • Referenced drawings or blueprints.
     • Agreed working hours (e.g., 8 AM–5 PM, Mon–Fri due to HOA rules).
   • The clearer your scope, the fewer misunderstandings you’ll face.
7. Signatures:
   • Always have the subcontractor sign first, then you sign. Provide copies to all parties involved.

This project-specific agreement works well for one-time jobs, but if you plan to work with subcontractors regularly, I highly recommend having an attorney draft a Master Services Agreement (MSA) for your business. The MSA will set the general terms for ongoing relationships with your subcontractors, like jobsite cleanliness expectations, payment terms (i.e. NET 30), etc. and you can use this project-specific agreement as an addendum for individual jobs.

Final Tip: Treat the contract as a transparent, collaborative tool to set expectations, not as a "gotcha" document. It helps to ensure everyone is on the same page and can save you headaches if issues arise.

If you need further guidance on structuring these points or tailoring them for your project, feel free to reach out—I’d be happy to help you get started! Best of luck on your flip, and I hope it’s the first of many successful projects.