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Understanding, negotiating a better home remodeling project

A home remodeling project is a big investment, and it can mean a big headache for homeowners, if things don't go as expected. Understanding and negotiating a better contract is the best plan of action. 

Contractors routinely battle the perception that home improvement projects always drag on beyond their expected completion date and that sometimes a second contractor has to be brought in to finish the job.

The experts at Angie's List say that situation can be prevented with a solid contract. But most homeowners don't do their homework, when it comes to this area.

"An Angie's List poll found 16 percent of respondents don't fully read contracts before signing it.  It's not a contractor's job to protect your interests, that's your job," says Angie Hicks of Angie's List.

Angie's List found 70 percent of contracts don't include a clause tying payment with completed work and 45 percent don't provide an opportunity for the contractor and the customer to part ways without penalties, if things aren't going as planned.

There are nine terms that should be included in every contract that can protect your best interest.

Number 1 - Spell out the job description.  This should include your responsibility in paying the contractor and making your home available. It should also detail the responsibilities of the contractor.

Number 2 - It should clearly state start and completion dates, but be willing to be flexible.

Number 3 - Payment terms.  Show in writing what if any amount will given as a down payment and then tie the final payment to the completion date.

Number 4 - Include terms for penalties for missed completion dates.

Number 5 - There should be a procedure for work orders and changes to the initial agreement. 

Number 6 - Include a detailed outline of costs and materials. 

Number 7 - The agreement should require the contractor to include proof of license to do the work, insurance and bonding. This protects you from being liable for work related injuries.

Number 8 - There should be a termination clause.

Number 9 - Ask the contractor to provide a Lien Waiver so that you can't be sued if the contractor fails to pay a subcontractor. 

What you'll find in the contract can help or hurt you. It's important to read it in its entirety and don't be afraid to negotiate terms. A good contractor is going to be willing to negotiate reasonable items and if they are not, look for a different contractor.

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