How to Read a Construction Contract Before You Sign

Here’s a conflict I’ve seen more times than I can count. The kitchen renovation is wrapping up. Cabinets are in, countertops are set, and the backsplash is done. Then the homeowner asks the contractor when the refrigerator and range are getting hooked up. The contractor looks up and says, “We don’t install appliances.”

Nobody’s lying. Nobody’s being difficult. But someone is surprised, and surprises at the end of a renovation project are expensive, stressful, and almost always avoidable.

The contract was silent on appliances. That silence cost both sides. The homeowner scrambled to find an appliance installer on short notice. The contractor had to explain something that felt obvious to them but was never written down. And a project that should have ended on a good note didn’t.

This is what a construction contract is supposed to prevent. Here’s what to read, and why it matters, before you sign.

The Scope of Work

The scope of work is the most important section in the contract. It defines exactly what is included, not the spirit of it, but the specifics. Call out for unique items (a door to be reused, trim to be matched, or cabinets to be donated). Appliances are a common example, but the same principle applies to paint and trim after demo, final cleaning, haul-away of debris, and permit fees.

Read this section like a list of everything that is explicitly included, and then ask: what’s missing? If something matters to you- even if it seems obvious- it needs to be in writing.

The Payment Schedule

A construction contract should spell out exactly when payments are due and what triggers each one. Milestone-based draws, after demo, after rough-in, after drywall, and at completion, are standard practice. Be cautious of a large upfront payment with no clear milestones tied to it.

You’re not looking for a perfect payment structure. It is not one size fits all. You’re looking for one that makes sense and is tied to real progress on the job.

The Change Order Clause

This section explains what happens when the scope changes, and on almost every renovation, the scope changes. The change order clause should require that any additions or modifications be priced, approved in writing, and signed before work begins.

If the contract is vague here, or if it implies that verbal agreements are acceptable, that’s worth a conversation before you sign. For a full breakdown of how change orders work and what to watch for, this post covers it in detail.

Warranty Terms

What does the contractor stand behind after the project is complete? For how long? Under what conditions? A standard workmanship warranty runs one year. Materials are typically covered by manufacturer warranties, not the contractor’s. Make sure you understand which is which, and get it in writing along with any available warranty literature from the manufacturers. 

Dispute Resolution

Most contracts include a clause explaining what happens if there’s a disagreement, typically mediation, then arbitration, before either party goes to court. This isn’t a red flag. It’s standard. But read it so you understand the process if you ever need it.

The Termination Clause

What happens if either party needs to walk away? This section should explain the conditions under which the contract can be ended, what happens to work already completed, and how payment is settled at that point. It’s not a fun section to read. It’s an important one.

Lien Waiver Language

This one catches a lot of homeowners off guard. A lien is a legal claim that a subcontractor or supplier can file against your property if they haven’t been paid, even if you’ve already paid your general contractor in full. Lien waivers are the documentation that protects you. Your contract should reference them, and your final payment should be conditioned on receiving a full lien release from the GC.

One More Thing Before You Sign

A contract should feel like a complete document, not a loose outline. If a contractor’s proposal was detailed and transparent when you were comparing quotes, you’ll usually find that same clarity carries into the contract. The contractors who price honestly tend to write clearly. That consistency is worth paying attention to.

Reading a contract takes time. But it takes a fraction of the time you’ll spend sorting out a misunderstanding once the project is underway.

If you’re heading into a renovation and want a second set of eyes on the proposal, the scope, or the contract before you commit, that’s exactly what I do. Let’s talk.

Charlie

The Field PM, thefieldpm.com