Contracting With A Custom Home Builder: Three Key Factors To Consider

6 January 2023
 Categories: , Blog


When you hire a custom home builder, you'll likely sign a contract before any construction work begins. The contract typically covers the cost, the scope of work, the timeline for the project, and other miscellaneous legal items. The best contract will protect both you and the home builder to help ensure everyone is happy and satisfied with the final product. As you prepare to sign a contract with your custom home builder, here are some key factors to consider to help protect your investment. 

Insurance Coverage

Your custom home builder should be licensed, bonded, and insured to protect your investment in the event of an accident or negligence. Homebuyers can request to be added as an additional insured party to the contractor's policy for the duration of the construction project. This additional coverage provides you with the right to file a claim with the builder's insurance company in the event of damage, injury, or loss during construction. Be sure to read any section of the contract dealing with insurance carefully, paying careful attention to whether or not there's a clause for additional insured coverage. Your lawyer can help you navigate this process, and if necessary, make a request should you feel uncomfortable asking to be added to the policy. The additional insured coverage is temporary, so it will not extend beyond the time of construction. You'll need to rely on your homeowner's policy for future liability issues after the home is completed. 

Warranty Coverage

New construction homes often come with a builder's warranty, which covers specific issues that might arise in the future. The warranties typically have a time limit and address only certain aspects of the home, such as doors and windows, plumbing, electrical wiring, and roofing. Your contract should outline the warranty being offered on the project, but it's also a good idea to discuss the manufacturer's warranties on the materials before you sign the contract. For example, some roofing shingles may come with an extended warranty. As the homeowner, you'll want to have this information so you can file a claim with the appropriate party should you need repairs in the future. 

Scope of Work

Covering the scope of work is essential for a custom home build. You want to know that all the details you want to be included in the home are both covered in the contract and in the cost of your project. Even seemingly small details are important, such as a single-bath vanity versus a double-bath vanity. The cost and labor involved in these aspects of the project can impact the final cost considerably. It's important to note that the scope of work can change during a project through no one's fault. For example, the builder may discover that the materials they ordered have been delayed or are unavailable due to supply chain issues. Make sure the process for changing the scope of work is addressed in the contract to help ensure costs remain under control and to make sure you remain informed throughout construction. 

For more information about building a custom home, contact a local company, like Regency Builders LLC.


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