How to Prepare a Construction Agreement

The construction agreement is a legally binding contract between the parties. It includes the details of this construction project. This kind of agreement covers complex, expensive projects and also simple renovations. For the construction agreements mainly there will be 2 clients.

They are commercial and residential. If there is any need of going into the construction agreement, you should be aware of how to prepare a construction agreement which makes your work much easier in preparing the agreement.

Here are the steps to prepare the construction agreement.

Work scope

The agreement determines the work specifics of the contractor. This is generally known as the work scope. Insure that your agreement offers a clear understanding about the tools, equipment and the materials that are needed by the contractor to finish the task as mentioned in the work scope.

Necessary information

Try to discuss the preparation and plans that are necessary for the task. Try to get a clear understanding of what task should be accomplished, where it should be accomplished, time length taken to complete the work, project expense should be mentioned in your agreement.


Make sure that you clarify the site and the structure mentioned in the agreement. It would be much better to see the contractor’s previous work photos and drawings of the described plans.


The contractor should determine all the terms of the payment. The agreement should also make clear that how and when to pay the remaining payment. If you have decided to pay in the monthly basis, the finance charges and terms should be clearly mentioned in the agreement.


If the construction involves any kind of excavation, insure that your contractor has accepted to contact the suitable officials to properly do the work. The gas lines, utility lines, sewer lines and water lines should be identified clearly before starting the construction.

Insurance coverage

The agreement should clearly determine all parties’ responsibilities. Make sure that the contractor has a suitable insurance coverage. Clearly determine that the worker injuries are not the homeowner responsibility. In the same way if any damages are caused by your contractor, it should be covered under the contractor’s insurance policy. This should be mentioned in the agreement.

Category: Sample Agreements

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