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Agreement for Construction of Residence
(Between Builder and Owner)
Agreement dated [date] by and between [name], with offices at
[address] (Builder), and [name], residing at [address] (Owner).
1. Builder's Undertaking and Cost of Construction. Builder
will construct a [describe house], more fully described in the
drawings, blueprints, and specifications attached to this Agreement and
made a part thereof (the House). The House shall be constructed on a
tract of land which is more specifically described on a survey attached
to this Agreement and made a part thereof on which the House location
has been placed, which survey has been signed by Owner. Builder will
supply all labor and materials and will complete construction of the
House in accordance with the attached drawings and specifications for
the sum of ---------- dollars ($----------). Said sum shall be paid as
follows: [set forth events that trigger payments] [or: in accordance
with standard construction mortgage releases]. The price shall include
temporary heat and electricity installed by Builder, if the same is
necessary. When electricity is drawn into the House through a hookup
with the lines of the local power company, Builder may have the use of
such electricity, which is to be paid for by Owner.
2. Owner's Warranties Regarding Tract. Owner represents and
a. He is the sole owner of the tract of land on which the
House is to be erected.
b. He has not executed and, until this Agreement is fully
completed, will not execute any deeds, leases, or other documents that
will convey to anyone else any interest in the land (other than the
construction and permanent mortgages).
c. Title to the land is good and marketable.
d. The premises are free and clear of all liens and
encumbrances (with the exception of the construction and permanent
e. The tract of land abuts a public street or is accessible
by way of a permanent right of way as means of uninterrupted access to
and from the subject tract to enable Builder to perform this Agreement.
f. Owner will remove or remedy any situation that is
contrary to any of the foregoing representations and warranties.
3. Time of Completion. All work will be completed in a
workmanlike manner according to practices that are standard in the
community in which the House is to be constructed. The work shall be
completed and the House available for occupancy no later than [date].
Anything to the contrary contained in this Agreement notwithstanding,
Builder shall not be liable for any delays caused by strikes, accidents,
fires, or other casualties; civil insurrection; or other events outside
of the Builder's control.
4. Insurance. Owner shall at all times maintain fire and
extended coverage insurance on the House in an amount no less than the
full insurable value thereof. All such insurance policies shall be
payable to Owner, Builder, and mortgagees, as their respective interests
should appear. Builder will carry Workers' Compensation and Contractor's
Liability Insurance in an amount not less than ---------- dollars
($----------). The parties, upon demand, shall provide each other with
certificates evidencing ownership of such insurance.
5. Permits and Liens. Owner is responsible for obtaining all
necessary permits and for the cost thereof. By executing this Agreement,
Owner designates Builder or Builder's agent as Owner's agent to obtain
all necessary permits. Builder will place a stipulation against liens
against the tract and Owner shall be responsible for the cost of filing
6. Work to Be Done by Builder. Builder, at its own cost and
expense, shall provide all manner of materials, labor, scaffolding,
implements, molds, models, and cartage of every description for the due
performance of all of the work provided in the attached drawings and
specifications. All plumbing shall be properly installed and all
connections thoroughly tested in accordance with local ordinances. Hot
and cold water connections shall be made to all necessary fixtures. All
house supply lines, waste lines, and vent pipes shall conform to local
code requirements. Tap-on fees, if any, are to be paid by Owner.
7. Material and Products. All material is guaranteed by
Builder to be as specified herein. Builder is authorized to substitute a
better grade or quality of material or to substitute products of equal
grade or quality instead of those specified, provided they are
recognized in the construction industry as equal to or better than those
specified. Notwithstanding the foregoing, no material or products that
will affect the appearance or utility value of the House or its
components will be substituted by Builder without Owner's written
8. Work by Owner. Any work that Owner is to do shall be
coordinated with the work that Builder is to do so as not to delay
Builder in the performance of its work.
9. Drawings and Specifications. The drawings and
specifications attached hereto are intended to coordinate with and
explain each other. If there is any ambiguity between them, the
specifications shall control over the drawings. The specifications and
drawings are incorporated in this Agreement as they exist at the time of
the execution of this Agreement or as they may be amended in the future
by the mutual agreement of Builder and Owner. No changes in the drawings
or specifications, other than those required to carry out the meaning
and intent of this Agreement, shall be made unless Builder and Owner
agree on the nature and extent of such changes and the price to be paid
by Owner to Builder for such changes. All changes in the drawings or
specifications shall be binding only if they are set forth in writing on
Builder's Change Order or Extra Work Voucher and signed by Owner.
10. Blueprints. All drawings shall be shown on blueprints
prepared by Builder. Owner shall be given a set of preliminary
blueprints without charge. Owner shall sign and accept all final
blueprints, provided they incorporate all changes requested by Owner
following Owner's review of the preliminary blueprints. After acceptance
of the final blueprints, if any changes are requested by Owner, Owner
shall pay an administration charge of $300 for each change ordered. The
administration charge shall be paid in full at the time Owner signs the
Builder's Change Order or Extra Work Voucher.
11. Builder's Guaranties. Builder guarantees that the House
will be free of defects in workmanship for a period of [number] years
from the date the occupancy certificate to the House is issued by
Builder to Owner as hereinafter provided. All materials will be
furnished under standard trade rules or manufacturer's warranty or
guaranty, and Builder's liability for defects in material shall be
limited to the filing of proper claims with the manufacturer. Builder
shall not be liable for the presence of water or dampness in crawl
spaces or in the basement of the House.
12. Mortgage Loan. This Agreement is conditioned on the
Owner's obtaining a permanent mortgage loan in the sum of ----------
dollars ($----------), and Owner will use his best efforts and cooperate
with Builder to obtain such loan. Such mortgage loan shall provide that
the lender will make payments to Builder as construction proceeds in
accordance with a schedule approved by the lender (Construction
Payments). Owner shall obtain a commitment for the mortgage loan from a
lending institution within [number] days from the date hereof and
close on construction financing within [number] days thereafter.
If Owner is unable to obtain a commitment within the time herein
specified, Builder, within a period of [number] days following the
last day on which Owner was to obtain the commitment, may submit at
least [number] applications for a permanent mortgage loan on behalf of
Owner. If Owner is unable to secure a commitment for a permanent
mortgage following the submission of these additional applications,
Builder shall return to Owner all monies paid by Owner to Builder in
accordance with the provisions of this Agreement, except for any fees,
costs, and out-of-pocket expenses borne by Builder to process this
Agreement and to prepare drawings, blueprints, and specifications. A
statement of all such fees, costs, and expenses shall accompany the
payment. Upon receipt of any monies due to Owner in accordance with this
Paragraph 12 together with the statement of fees, costs, and expenses,
this Agreement shall terminate and be without force or effect. All
drawings, blueprints, and specifications prepared by Builder shall be
Builder's property, and Owner shall return all copies thereof in his
13. Release of Construction Payments. Owner shall inspect
the House prior to every release of a Construction Payment. Any failure
of the Owner to inspect the House, or to inform the Builder of any
deviation from this Agreement or the drawings or specifications, shall
be deemed a waiver of any right Owner may have to object to or reject
such deviations on work performed by Builder during the particular stage
of construction for the release of a Construction Payment and shall be
deemed to be an acceptance thereof by Owner. Notwithstanding the
foregoing, structural defects that reduce the fitness of the House for
occupancy shall not be deemed accepted by Owner, who shall retain all
rights that he may have to demand that they be corrected.
14. Occupancy of House. Owner shall not occupy the House,
either physically or by moving in personal possessions, until (a) the
House has been completed in accordance with the drawings and
specifications attached hereto; (b) all the terms of this Agreement have
been complied with; and (c) an occupancy permit is issued by Builder to
Owner. Until final settlement of all monies owed to Builder, the house
shall remain Builder's property. Owner's occupancy of the House shall
constitute acceptance of the work performed by Builder as being in
compliance with the provisions of this Agreement, the drawings and
specifications that are part of this Agreement, and any Change Order or
Extra Work Voucher signed by Owner. At the time Owner authorizes release
of the final Construction Payment, Builder will give Owner a printed
form on which Owner shall prepare his list of necessary punch work.
Owner shall return such list no later than [number] weeks after it has
been provided by Builder, or Owner shall be deemed to have waived his
right to any such work. Punch work is not part of this Agreement or the
drawings and specifications attached to the Agreement, and Owner will
not hold up final release of construction funds because of punch work.
15. Unexpected Conditions. The price set out in Paragraph 1
hereof is based on a natural formation of the ground on the tract and on
the assumption that only soft digging will be required for the
construction of a foundation, the installation of a septic system, and
any other excavation required by this Agreement. Should blasting of rock
be necessary or should hard shale, rock, or water be encountered, there
will be an additional charge to Owner for blasting of rock and/or
removing the hard shale, rock, or water to the extent of any cost in
excess of the cost of soft digging, together with any extra cinder block
or concrete that is required. Any back filling or rough grading will be
performed with the soil removed from the excavations. However, if
additional fill is required, the cost of such fill shall be billed to
Owner. Builder will not be responsible for the settlement of back fill
or for broken pipes or plumbing fixtures caused by frozen pipes if such
damage occurs after release of the final Construction Payment.
16. Delay of Construction by Owner. If Owner delays
construction by indecision, by failure to authorize release of
Construction Payments, or for any other reason not due to the fault of
Builder, Owner shall be responsible for all additional costs incurred by
Builder as a result of such delay. Such costs shall include, but are not
limited to, (a) extra labor and materials and (b) the down time of
workers and equipment or, in the alternative, the cost of moving
equipment to other job sites. If payment is not received within
[number] days after billing, Builder may stop all work until payment
is made in full.
17. Breach by Owner. If Owner makes any material breach of
this Agreement, Builder may terminate this Agreement upon sending notice
to Owner at the address provided in this Agreement or otherwise provided
by Owner, by registered or certified mail, return receipt requested.
Upon sending such notice, Builder shall have no further obligations
under this Agreement and may terminate construction. Builder may retain
any monies it has received, and, if the percentage of construction
completed at the time such notice is given has not been paid for in
full, Builder shall be entitled to receive such unpaid amount from the
Owner together with the agreed-on price of all unpaid extra work
performed by Builder. In addition to the foregoing, Builder shall be
entitled to ---------- percent (----------%) of the amount paid by Owner
to Builder to date (including any unpaid amounts described in this
Paragraph 17) together with Builder's collection costs and attorney
fees, if any, as liquidated damages and not as a penalty.
18. Arbitration. Any and all disputes between the parties
arising under this Agreement shall be determined by arbitration by three
arbitrators in the City of [name] before the American Arbitration
Association in accordance with its rules then obtaining, and judgment
may be entered upon the award in any court having competent jurisdiction
of the subject matter thereof.
19. Captions. The captions in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
20. Entire Understanding. This Agreement contains the entire
understanding between the parties and supersedes all previous agreements
between them regarding the House, whether oral or in writing. This
Agreement cannot be modified or terminated except in accordance with its
terms or by a writing signed by the parties.
21. Place of Execution. Regardless of where this Agreement is
executed, it is deemed executed in ---------- on the day and year first
above written. This Agreement shall be interpreted in accordance with
the laws of [state].