Legal Bits: Nuts & Bolts Advice About Your Remodeling Contract Part #4

Most people don't really read contracts until there is a problem - and then each word is put under a microscope. You can save yourself a lot of expensive headaches by having proper wording in your contract to cover the myriad situations that can get you into trouble as a remodeler. The purpose of this series of articles is to provide you with suggested contract language to protect yourself. I welcome any feedback that you think might benefit other remodelers or suggested clauses that you might use in your contract.

TODAY'S TOPIC: Stop Giving It Away for Free - Use a Specification Design Agreement

I have relearned my lesson. I just spent weeks helping clients pull together a complex whole-house remodeling/restoration project. The technical difficulties required many more subcontractor meetings on site than usual. A lot of expert information was passed on to the homeowners. A day or two before the scheduled start of work, the owners decided not to use our company. They decided the wife's father-in-law, an engineer, could manage the construction. I was furious and tried hitting them up for a fee for the many, many hours of work performed on their behalf. They laughed and said, "We had no contract." Things got ugly, but they were right. Bottom line: They have three versions of my specifications, and I have nothing to show for it.

I should have known better. It was a terrific house. I wanted this job. My emotion overrode my gut feelings, my legal training and my 23 years of experience. Hopefully the simple form set forth in this article will help prevent you from giving it away for free like I did.

The best way to handle this is to have a professional services agreement, which I call a specification design agreement. This is a simple form you can use when you have a project that will require a lot of your skill and time to pull together. This is different from a design agreement because you are providing mainly specifications development. I would not use this form for a simple exterior paint job or a cookie-cutter bathroom remodel, but for whole-house remodeling and room-addition work, this can be very useful.

[DATE]

[Owner's Name]
[Project Address]
[Project City, State, ZIP]

RE: Specification Design Agreement

Dear [Owner];

The purpose of this letter is to confirm that you wish to retain my services to organize and pull your project together into construction specifications. Specifications are more detailed descriptions of the various components of your project. Once these specifications have been created, a more accurate estimate can be produced to build those specifications. The estimate should not be done until the specifications have been completed.

As you know, a project like yours can represent a major expenditure and investment in your home. It makes sense to have a professional builder help you produce a road map of what you want done so the end product looks more like your vision. The fee for your project will be [$1,800.00] and will include the following:

2. A second trip to gather data - to measure, do digital still photography, sketch areas needing design - in this case [the kitchen oven/range area and the master bath].

3. Detailed specifications of your various interior projects and one follow-up round of revisions to make any changes after you have had a chance to study them.

4. "As-built" and "new plan " sketches of the following areas:
a) oven-range area
b) master bath at closet wall

5. A meeting with you at your home to look at those proposed changes on my laptop computer. We can make minor changes at that meeting.

6. If specification or drawing design assistance beyond the work described above is needed, we can agree later to work on an hourly basis at the rate of $85.00 per hour. Your approval would be obtained first before any hourly work.

1. An initial meeting on site to review the various aspects of your project.

It usually takes me about one week to do the drawings on the computer and an additional week to prepare the specifications once I have received the signed agreement from you. This letter will serve as our agreement that you would like me to go forward with the above work. Payment is due at the time the agreement is signed, since the work will be substantially completed by our next meeting.

Please indicate your desire to proceed by signing below, and return the second copy of this letter along with your check to my office. I am excited about your project and look forward to working with you!

Sincerely yours,

Dan Bawden,
President, Legal Eagle Contractors, Co.
Certified Graduate Remodeler
Graduate Master Builder

DDB:jhp

Terms accepted on ______________________ (Date):

Note that this is a contract between you and the owners whereby they pay you for your time and expertise to pull their project together. Remodelers are used to giving this away, and clients will be happy to take it from you without paying for it if you let them. You must believe that your expertise is worth it to sell its value to the client. The agreement has a limit on the work you will do for them. If you have clients who keep changing their minds, there is a point at which you go hourly at whatever hourly rate you like (I put $85.00 per hour in mine). I have found that having an hourly rate stops the wild speculation and mind changing most of the time. If they continue to be indecisive and are paying me for my time, that's fine. I use this form even if there are no drawings to be made. If you are making design suggestions and typing them up into specifications, this form is for you.

Of course, you should review this form to be sure it fits your business and is allowed in your jurisdiction. It would be wise to let your attorney read your new form.