When you decide to build your dream home, it is not just about that. You must first consider a good Texas Hill Country home builder who can guide you through the process. And apart from that, there are many intricacies that you and the builder need to take care of, and the important one is agreeing and signing the contracts. Now you must know that a contract is just not a piece of paper with all the things that you and your Texas Hill Country home builder discussed over a cup of coffee, instead there are different types of contracts that determine when you will be paying, what you are liable of and what you will be paying during the different phases of construction.
The sole purpose of signing the contract is to save yourself and the builder from any future misunderstandings and miscommunications and to make sure that the terms of work are clear. Thus, when you are about to start the project of your dream home, here are different types of contracts that your Texas Hill Country home builder might ask you to sign.
Unit Price Contract
This contract your home builder might ask you to sign if he is looking to accentuate the type of work that is being carried out with an add-on of the materials that are being used for that particular work. The purpose of this contract is to ensure that you get to evaluate the const accurately and the home builder also gets to charge in the most precise manner for every category.
Lump-Sum Contract or Fixed Price Contract
As the name says for itself, the lump sum or fixed-price contract is the inclusion of all the price that is fixed for the construction of the home. When your builder gets you to sign the lump sum contract, he is taking the extra onus on himself as you will not be liable to pay anything extra than what is mentioned in the contract if the project goes through any unforeseen circumstances, or any problems occur that needs additional money during the ongoing project. Many lump sum contracts have the clause where separate allowances are included to cover anything unexpected. Thus, if your builder is willing to offer you a lump sum contract for your project, then be sure that he is charging a bit higher fee to accommodate the additional expenses that he is bound to bear during the construction work.
These fixed-price contracts are useful when the project has a set timeline and a defined scope of work. If you and your builder do not agree upon the terms, then things might get difficult for the builder to assess the cost that is going to be there in the future.
Time and Materials Contract
If your Texas Hill Country home builder thinks that your project does not have a defined timeline and going to take a lot of work for completion, then he might offer you to sign the time and materials contract as the scope of the project is not defined. This particular type of contract enables the home builder to charge for the materials and establish a daily or hourly pay rate.
So, when you sign this type of contract, given the unpredictable nature of your project, you will be responsible for bearing the risk of time and materials associated with it. This is because you are bound to pay the home builder for all the overtime, unexpected costs, and changes that happen as the project progresses.
Cost-Plus Contract
The contract is also called the cost-reimbursement contract as the owner is liable for paying the home builder for all the costs that took place during the entire project along with a decided amount of profit for the builder. In this type of contract as well, you are responsible for paying the unexpected expenses as well.
Thus, before you sign any contract, you must be aware of what you are signing and what all clauses are included in the contract. Talk all the terms clearly with the home builder and you will surely find a way that suits both parties.
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