Tips on what to require in your General Contractor's Agreement
Tips on what to require in your General Contractor's Agreement

(These guidelines are intended to assist you but not replace advice from your attorney)

1. When reviewing your general contractor’s Agreement or Contract make sure the services you have mutually agreed to are identified (this is generally achieved by referencing the plans prepared by the architect (Drawing sheet numbers and date of latest set of plans).

2. Identify the start date and agreed completion date (understanding this may change depending upon a variety of circumstances).

3. Define how Pay Requests (PR) will be submitted and timing of payments. If your project is intended to take 6 months to over a year you may want to require monthly invoice submittals; spell out a frequency that meets both your needs. Your first PR will include request for material deposits but should NOT include labor or services. Subsequent PR should include Unconditional Lien Releases (ULR) for previous PR and Conditional Lien Releases (CLR) for all charges represented on the current PR. Make sure your payments are for work completed. It is wise to request terms that withhold 10% of each PR be held until Certificate of Occupancy is obtained and sign-off of final Punch List is completed.

4. The Agreement should include a commitment for the general contractor to carry minimum levels of insurance; General Liability ($1M), Workmen’s Comp (State laws), Owned and Non-owned vehicle insurance coverage ($1M) and Course of Construction Coverage (value of construction) often carried by Owner instead of contractor. Insurance should be carried throughout the duration of construction and for at least 3 years following completion. It’s a good idea to require that the Owner be named as additional insured on the General Liability. You should also require that all subcontractors hired by the general maintain the same insurance. Require that a Certificate of Insurance be provided by your general contractor to substantiate coverage.

5. If your project is of significant valuation you may require that the general contractor be Bonded to protect completion of the project; bonding is expensive and the Owner will be required to pay fees associated with bonding.

6. General contractor should be required to maintain Contractor’s license in good standing throughout the duration of the project (verify this at the start). If the general contractor is hiring a superintendent for your project require that the superintendent’s name be identified in the contract.

7. Require that ALL Change Orders (CO) be approved in writing and signed by Owner and are otherwise, invalid.

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