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I’ve been lurking here for several weeks and since I’ve come to know many of you it is only appropriate that I briefly introduce myself to you, before asking for advise.
I’ve been in the building trades for many years and honed my remodeling skills under some very talented builders and designers. Despite possessing a builder’s license for roughly six years, it was only a few months ago that I decided it was finally time to become self-employed.
Everything is going good so far; work is not plentiful but adequate and my business knowledge is ever expanding. Thanks to what I’ve learned here, I finally have a firm handle on estimating, overhead and markup. 🙂
One area that I’m currently in need of the expertise from the members of this board is CONTRACTS. The ones I made are terribly inadequate.
Ideally I would like to seek the advise of a lawyer to develop some contracts, but money is tight. So until I can spare the money, anybody know where I can locate pre-printed contract that I can use off the shelf or modify to suit my needs? I’m in Michigan and all my work is bid fixed price (no T&M or Cost plus).
Also anybody have clauses that you have found to be invaluable in your contract(s)?
Thanks
Scott R
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Scott, here's a contract I created severa years ago, but for large remodeling projects. Perhaps some of it's secti0ns, along with the added advice you will get here, can help you create your own. I use a Mac so I converted it into a pdf file and it was a draft so it might contain a typo or two.
Also, before using one, make sure you run any contract thru a local lawyer with construction law experience.
*Here's another copy in Word Windows 98 which might be easier for some of you guys. Again, it's been converted from Word for a Mac so some of the formatting might be screwed up, but still readable.
*Nope, not readable. I used the word2000 that a very good friend sent me and I couldn't open it with that.
*OK, Microsoft Works 2.0
*Sonny, that's a quite an extensive contract. I like it!I need to understand better the clauses you have about dispute resolution agreements, liens and how those specifically apply to Michigan law. Thanks You.Scott
*Scott, that's why I suggested paying $100 or so and having your own attorney read it and suggest any modificatons to it for Mich. regulations and laws.Anyway, our cleints like it because it's so thorough and covers just about everything. I do think I made a change or additon or two since the copy you have. In fact, if you leave a blank copy with a potential client during your first meeting, it gives them the impression that (1) Your are indeed a pro, and (2) You've protected not only your self, but them as well. What could be better that an indication in writing of an attitude of fairness and high ethical standards on your part? Lastly, it also lets the "sharpies" know in advance that you're no dummy.Notice on the section about arbitration, it says that it will be done in Collier County (here). That eliminates the guy who is up north in Michigan and has a condo or home here who wants to have the medation or arbitration in his northern county - obviously not to our advantage. My philosophy is to treat all clients with the same turst as family, but us contracts as though each one of them is out to screw you.I also have a contract for jobs under about $5K and another one for small jobs under $1K if you may have an interest. If so, I'll email them to you.
*Sonny, I would very much like to see those contracts. My E-mail is [email protected] words, thank you, are inadequate. Scott
*Scott:You ought to review some of the "Standard Form..." contracts put out by the American Institute of Architecture (AIA). For exmaple "Standard Form of Agreement Between Owner and Contractor for a Small Project, where the Basis of Payment is a Stipulated Sum". They have long form contracts and short form contracts, depending on your needs. Again, have an experienced attorney review them to be sure everything is applicable to local law.You should be able to purchase individual copies at your local AIA branch, or online at http://www.e-architect.comGood luck.
*Jason:Are you seriously recommending AIA contracts to other contractors? They are extremely one-sided toward, first the architect, secondly the owner, lastly the builder. I have used them, but only when I really really really want a job that requires them.Allan
*I am with allan on this....What a joke.Builders need builders contracts...Remodelers the same...Small handymen..use the one page ones that you can get at Staples...Just use an invoice...or a bill....or a handshake.love the handshake best,ajOh...and I have sonnys contracts...very good...As sonny says...one size contract for each size project.
*Chirp chirp!The AIA contracts are good reading for novice contractors. They can learn how the big boys play. I wouldn't use them for my business.I prefer simple, simple, simple, in my language. blue
*Hey Sonny,I'd really appreciate getting a copy of your two smaller sized contracts for review. I have a couple different ones I use for different occations, but I have yet to develop one that I feel comfortable with as being bullet proof. Since most all my work is high end residential repaints, for years I went on the handshake method...never got burned and still often do it. Been getting more into owner assoc. in recent years and have been asked to sign other people's contracts, which I won't do. Some of the contracts I've been presented with are 7 page crawl-up-my-ass things that I wouldn't sign if I were starving. Point being, my "rebuttal contract" to theirs could use some improvments perhaps. And I've found the best way to improve them is to read other contracts for good ideas and wordings...in fact I believe I used some stuff from your "big contract" that you emailed me many many months ago. :)So if you'd get a chance, I appreciate it!Thanks,Q
*I didn't realize the AIA contracts were so distained by contractors. I will re-read some, with this in mind. As for bias, of course whoever writes the document will have the upperhand.(fyi, I work on the architecture side of the equation.)None-the-less, I still recommend them, if not for use, than at least for review and comparison. Should provide a good starting point for organization and structure. I agree that each contractor (or architect, or painter...), should have a least of couple of boilerplates in their quiver, appropriate for the scale and scope of the job.
*Get a copy of the Contractors Legal Kit by JLC publications. When I bought mine years ago, the book came with a diskette that had forms galore on it. Look at some, and modify as needed for your business. It is a GREAT place to start. I use a contract that I have modified for my business. I have a short, and a long version. It is VERY detailed, and is very straightforward. There is no mistake after reading it what I am going to do, how I am going to do it, what materials and supplies I will be using, and what will and will not be done or warranted. No matter where you are, you had better make absolutely sure that the wording and stipulations in your contract meet with your local laws. You can copy someone else's contract word for word, and get burned badly in the end if the contract doesn't meet your local laws.Just a thought...James DuHamel
*Scott if you think money is tight now you ought to see what it will be like when you lose big bucks when a contract doesn't do what you thought it did. There is so much difference from place to place you really need to ask this question of the local contractors association, Small Business Center, and a QUALIFIED lawyer.What you get here may be absolutely right on for whereever the person lives. But it may leave you swinging in the wind in your area.Plus, the most important part of all is that you completely understand the contract and be able to explain it to your customer. Most disputes happen because the contractor and the customer weren't really of like mind. Then when things go to pot, they really go to pot.
*Re: AIA ContractsI have heard the AIA contracts bashed frequently from contractors, for example (above), that they "They are extremely one-sided toward, first the architect, secondly the owner, lastly the builder. " (Yeah, like the typical contractor-provided contract isn't one-sided...)However, I have yet to have a contractor be able to point out exactly where this architect-centric offending language occurs, which supposedly covers the architect's ass while making the contractor responsible for everything. I would greatly appreciate being educated about where this language appears, because I sure as hell can't find it. Chapter & verse, please.Richard (an architect, BTW)
*rkm.... post one up and i'll be glad to point it out...or compare one to any good contract written by a contractor and his lawyer..u no exactly where the language is..it's right there under your finger as you explain to the contractor why he pays and you don't..hah, hah, hah..."""i sure as hell can't find it ""how did you gett out of architectural school if you can't find it ?chapter and verse... it's your contract .. you tell me
*Getting a little defensive aye Richard?It's quite easy to assume that any contract drawn by contractor's would be quite different than the AIA. If the homeowner hired a lawyer and drew one, it'd be different again. If you are trying to say that the AIA is neutral, then I'm going to accuse you of being extremely naieve.blue
*Richard:Two years ago I had an attorney who wanted me to build her a new home and wanted to use the AIA contract. I had used it before, with some trepidation, but this time I decide to meet with my attorney (who is an expert on builder contract issues and actually wrote some of the legislation in our state laws) to go over word for word the AIA contract. My memory does not allow me to quote specific language in the contract, but after spending two weeks and $2,000 in fees we had modified about 25% of the wording of contract, negotiated with the client, and then used it. I remember being quite amazed at how one-sided it was in protecting first, the architect, secondly the client, and lastly the builder. If you enter into any kind of agreement to buy a new car, read the fine print, it pretty much is for the benefit and protection of the manufacturer of the product and is promulgated by the entity selling the product, not a third party. If you buy a new home form me or have me build you one, I am going to set the terms, not a third party (in this case an architect). Now certainly in my contract there is language which gives the buyer certain remedies and protections (warranties, mediation, etc), just like the agreement I signed when I bought my new car gives me consumer protection. But the basic essence of the contract is that the terms and conditions are established by the manufacturer of the product. Allan
*Been busy the past few days and glad to see a lot of input on this subject. I've been reading David Gerstel's The builder's guide to running successful construction company, (Taunton 1991) and his sentiments mirror those expressed about the AIA contracts. Guess I need to read a copy of this contact for self-enlightenment.FredB I know what your saying. A good attorney is in the near future but a good accountant is first on the list right now (new subject). I can avoid customers that I don't feel comfortable with, but I can't avoid the IRS.Scott
*Scott:>>Been busy the past few days and glad to see a lot of input on this subject. I've been reading David Gerstel's The builder's guide to running successful construction company, (Taunton 1991) and his sentiments mirror those expressed about the AIA contracts. <<I've built a few projects with Dave as the contractor, and hold him in high regard. I like (most of ) this excellent book. (Hey, I'm even in the credits!) He is quite passionate about this topic but I have yet to get him to point out -exactly- what it is he finds so objectionable. He has used AIA contracts, and has his own addendum to them, and that's fine. Nobody's saying any contract is perfect with no need of modification.I can think of only two issues that a contractor might find annoying in the AIA contracts:1) The architect's authority to reject work that doesn't conform to the contract documents. Although why a contractor would need the right to perform work that didn't meet the drawings and specifications is beyond me.2) The architect's certification of the contractor's request for payment. I'm sure that contractors don't enjoy having a third-party getting in the way of a pay request, but having seen the abuse and results from overpayments to the contractor, this is a protection that most Owners appreciate and deserve. In actual practice, I've had contractors tell me that the comfort level that Owners get from the architect's certification helps them get their money faster, with less hassle.I suppose most contractors don't feel like Owners need "protection" from them. And to be fair, as Gerstel points out, there are also architects that need to be protected against as much as shady contractors. Yet, architects are trained to be and are often hired as the Owner's representative on the job, and when you get into an architect-designed situation, this may well be part of the package, as much as you may want the architect to just "draw the plans" and go away. In this situation, it seems prudent to start with a document that defines these responsibilities clearly. But to get back to the original issue, I still want to know where this CYA language is for the architect in the AIA documents, because as far as I can see, it just doesn't exist, contrary to popular opinion.Richard
*Richard:I agree with your statement that when a builder goes into a project that is an “architect-designed situation, this may well be part of the package”, (this being an AIA contract). If an architect calls me to bid a job, and tells me upfront that I have to use an AIA contract, that he is approving the draws, then I have to, at that point, decide if I want to continue under those terms. I can make the decision, if I want the job bad enough, and if those are hard and fast requirements, then I choose to operate under those conditions if I take the job.As far as your statement “why a contractor would need the right to perform work that didn't meet the drawings and specifications is beyond me”, I can tell you there are decisions that have to be made daily by a builder where the architects drawings and/or specifications just don’t work, and under the AIA, technically, a builder would haver great exposure. You sometimes just don’t have time to call all of the parties in and decide on every minutia item. This too broad.I would say, to the positive of working with an architect, that the more detail the better for the builder. My most stressful jobs are where there is not enough detail. I also think that 95% of this comes down to builder and architect working together as a team, each respecting the other’s position and responsibilities. What I try to avoid are the ego driven, hard to get along with types, where the relationship becomes, at best very strained, and at the very worse very confrontational. And as we all know, there are some very bad builders, so it cuts both ways.I do fairly high end work (1-2 million), and fortunately don’t have to do get involved with these difficult jobs. I am able to do large, profitable jobs without getting bogged down on AIA work. Having said that, on the very, very, very, high end work (3 million+), some clients just have a comfort level working with an architect and having that extra layer of protection. I know I miss out on some of these jobs, but if I can meet my annual goals why burden myself with more stress. I think most architects do a good job and provide a service to their clients, but if a builder can keep things simple, make his desired margins, use a more favorable contract than the AIA, and to some extent control the job, why complicate things. I can tell you, after having talked to the other builders at the nation NAHB convention for over 20 years, the very successful ones steer far away from the AIA. That’s not to say there is the exception, but I don’t think this is the rule.Finally, I am still asking the question, if I am building a house for someone where I have contractual, legal requirements to meet and abide by, why would I want to use a contract promulgated by a third party who is being paid by the person I am entering into the contract with, and on top of that third party control my draws?Allan
*rkm... don't get me wrong.. i love working with architects..the b best jobs are when a good architect teams up with a good builder.. working for a good customer with a realistic budget...and the AIA contract never rears it's head...some things i just won't do.. one is sign a contract with liquidated damages..another is where "time is of the essence".. and the third is when architects ask me for a competitive bid...no thanks...
*Richard, you ovviously have never been on the short end of the subjective opinion stick.How about letting me the contractor tell you whether you drew it right?blue
*Blue:Yeah, like you wouldn't, anyway? It may be hard for you to believe, but most responsible architects WANT you to tell them if you see a problem in the drawings. But as far as my never ending up on the short end of the opinion stick, boy, are you WAY wrong, there! Richard
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I've been lurking here for several weeks and since I've come to know many of you it is only appropriate that I briefly introduce myself to you, before asking for advise.
I've been in the building trades for many years and honed my remodeling skills under some very talented builders and designers. Despite possessing a builder's license for roughly six years, it was only a few months ago that I decided it was finally time to become self-employed.
Everything is going good so far; work is not plentiful but adequate and my business knowledge is ever expanding. Thanks to what I've learned here, I finally have a firm handle on estimating, overhead and markup. :-)
One area that I'm currently in need of the expertise from the members of this board is CONTRACTS. The ones I made are terribly inadequate.
Ideally I would like to seek the advise of a lawyer to develop some contracts, but money is tight. So until I can spare the money, anybody know where I can locate pre-printed contract that I can use off the shelf or modify to suit my needs? I'm in Michigan and all my work is bid fixed price (no T&M or Cost plus).
Also anybody have clauses that you have found to be invaluable in your contract(s)?
Thanks
Scott R