New Home Construction Agreement - Cost Plus

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This New Home Construction Agreement is between a property owner and a contractor who will construct a new home based on an hourly rate of pay, plus a commission on the total price. This agreement sets out all terms of the arrangement including the home's specifications, expected construction time frame and how construction delays will be handled.

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This New Home Construction Agreement (Cost Plus) is between a property owner and a contractor for the construction of a new home. This agreement sets out that the contractor will be paid an hourly rate for all labor, materials and permit, plus a commission on the total price. It also specifies the expected construction timeframe, the home’s layout and specifications and how construction delays will be handled. It is crucial that this contract be set out in writing rather than via oral agreement. A written New Home Construction Agreement – Cost Plus will be helpful if there are disagreements or misunderstandings between the property owner and the contractor.

This New Home Construction Agreement – Cost Plus contains the following provisions:
  • Date of Agreement/Parties: The effective date of the agreement and names and addresses of the parties;
  • Definitions: Detailed definitions of the agreement terms including commencement date, substantial completion of home, term and working day;
  • Construction of Home: Sets out the time frame (number of months) expected to complete the construction of the new home;
  • Changes: Sets out that any changes to layout or specifications must be mutually agreed to in writing by both parties;
  • Contract Price: The contract price shall be paid based on an hourly rate plus commission and is set out in detail on Schedule C to this agreement;
  • Delays: The term of the agreement shall be extended if delays are caused by owner, public authority or if delays are unavoidable (i.e., a fire or union lockout);
  • Legal Compliance/Insurance: The contractor agrees to comply with all applicable rules and regulations and to maintain liability insurance at its own expense;
  • Warranty: The contractor shall set out in any specific home warranty in detail;
  • Schedules: The layout of home, details of finishes and the comprehensive payment schedule are set forth in Schedules A, B and C to this agreement.

Protect Yourself, Your Rights and Your Property by purchasing our attorney-prepared forms.

This attorney-prepared packet contains:
  1. General Instructions
  2. New Home Construction Agreement (Cost Plus)
State Law Compliance: This form complies with the laws of your state
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.
 
 
New Home Construction Agreement
(Cost Plus)

 

THIS AGREEMENT made as of [Date of Agreement (ie. July 1, 2002)] between [Name of Owner] ("Owner") of [Address of Owner] and [Name of Contractor] ("Contractor") of [Address of Contractor].
WHEREAS:
(A)   Owner owns the Property described below; and
(B)   Owner wishes to retain Contractor to build a new home on the Property;
NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1 -    INTERPRETATION
1.1   Definitions. In this Agreement, the following words and phrases will have the following respective meanings:
(a)   Agreement” means this Agreement and all schedules and attachments hereto.
(b)   Commencement Date” means the date upon which a building permit is issued for the construction of the Home.
(c)   Home” means the home to be constructed on the Property in accordance with the terms and conditions of this Agreement.
(d)   Property” means the property located at [Address of Property].
(e)   Substantial Completion of the Home” means completion of the Home such that it is ready for use or is being used for the purpose intended, notwithstanding that some finishes or other work has not been completed.
(f)   Term” means the period between the Commencement Date to Substantial Completion of the Home.
(g)   Working Day” means a day other than a Saturday, Sunday, or a holiday which is observed by the construction industry in the City in which the Property is located.
1.2   Prior Agreements. This Agreement supersedes all prior negotiations, representations, or agreements, either written or oral, relating in any manner to the Home, including any bidding documents that are not expressly made a part of this Agreement.
1.3   Amendments. This Agreement may be amended by written agreement signed by all parties hereto.
1.4   Currency. All currency amounts in this Agreement are in U.S. funds unless expressly otherwise provided.
1.5   Successors and Assigns. This shall enure to the benefit of and be binding upon the parties hereto, their respective heirs, legal representatives, successors, and assigns.
ARTICLE 2 -    Construction of THE HOME
2.1   Construction of Home. Contractor agrees to build the Home on the Property in accordance with the terms and conditions of this Agreement and in the manner provided for in this Agreement. Contractor will use its best efforts to achieve Substantial Completion of the Home within [Number of Months it is expected to take to Complete Construction of Home] months after the Commencement Date.
2.2   Specifications of Home. The Home shall be constructed in accordance with the layout specified in Schedule “A” hereto and the details and finishes specified in Schedule “B” hereto, and shall be constructed in accordance with the plans and drawings mutually approved by the parties hereto.
2.3   Changes. There shall be no changes to the layout, details, specifications, drawings or finishes of the Home unless such changes have been mutually agreed to in writing by the parties hereto.
2.4   Access to Home. Owner shall have access to the Home during construction at reasonable times, provided that Owner gives Contractor reasonably prior notice requiring any such access.
2.5   Control over Construction. Contractor shall have total control over the construction of the Home and shall effectively direct and supervise the construction of the Home so as to ensure conformity with this Agreement. Contractor shall be solely responsible for construction means, methods, techniques, sequences, and procedures and for co-ordinating the various parts of the construction of the Home under this Agreement.
ARTICLE 3 -    CONTRACT PRICE AND PAYMENT
3.1   Contract Price.Owner agrees to pay Contractor the actual cost to Contractor of all labour (including his own time at the rate of $[hourly rate] per hour), materials, permits and all other proper charges in connection with this Agreement, plus a commission of [Commission Percentage]% on the total cost aforesaid; provided that in any event the total cost plus commission shall not exceed the sum of $[Maximum Commission Amount] and Owner shall not be liable to pay more than the aforementioned sum except for extras, agreed to in writing, and the commission on them. Contractor shall invoice Owner in accordance with the payment schedule attached hereto as Schedule “C
3.2   Subcontracts, Discounts. Contractor shall order all materials and shall take out all subcontracts, and shall endeavour to obtain all discounts, the saving to be passed on to Owner.
3.3   Lien Holdback. The lien holdback shall be withheld in accordance with the applicable lien legislation when paying for trades, materials and subcontractors.
3.4   Interest on Overdue Payments. If Owner fails to make payments as they become due under the terms of this Agreement, interest at the rate of eighteen percent (18%) per annum on such unpaid amounts shall also become due and payable until payment. Such interest shall be compounded on a monthly basis.
ARTICLE 4 -    DELAYS
4.1   Delay Caused by Owner. If Contractor is delayed in the completion of the construction of the Home by an action or omission of Owner or anyone employed or engaged by them directly or indirectly, contrary to the provisions of this Agreement, then the Term shall be extended for such reasonable time as may be required by Contractor, and Contractor shall be reimbursed by Owner for reasonable costs incurred by Contractor as the result of such delay.
4.2   Delay Caused by Public Authority. If Contractor is delayed in the completion of the construction of the Home by a stop work order issued by a court or other public authority and providing that such order was not issued as the result of an act or fault of Contractor or any person employed or engaged by Contractor directly or indirectly, then the Term shall be extended for such reasonable time as may be required by Contractor and Contractor shall be reimbursed by Owner for reasonable costs incurred by Contractor as the result of such delay.
4.3   Unavoidable Delay. If Contractor is delayed in the completion of the construction of the Home by labour disputes, strikes, lock-outs (including lock-outs decreed or recommended for its members by a recognized contractors' association, of which Contractor is a member or to which Contractor is otherwise bound), fire, unusual delay by common carriers or unavoidable casualties, or without limit to any of the foregoing, by a cause beyond Contractor's control, then the Term shall be extended for such reasonable time as may be required by Contractor. The extension of time shall not be less than the time lost as the result of the event causing the delay, unless Contractor agrees to a shorter extension. Contractor shall not be entitled to payment for costs incurred by such delays unless such delays result from actions by Owner.
ARTICLE 5 -    CONTRACTOR'S RIGHT TO STOP Work
5.1   Insolvency of Owner. If Owner should be adjudged bankrupt, or makes a general assignment for the benefit of creditors because of Owner's insolvency, or if a receiver is appointed because of Owner's insolvency, Contractor may, without prejudice to any other right or remedy Contractor may have, by giving Owner or receiver or trustee in bankruptcy notice in writing, terminate this Agreement.
5.2   Failure to Pay. Contractor may notify Owner in writing that Owner is in default of Owner's contractual obligations if Owner fails to pay Contractor when due any amounts owing under this Agreement.
5.3   Compensation for Default. If Contractor terminates this Agreement under the conditions set out above, Contractor shall be entitled to be paid for all work performed to the date of termination, including reasonable profit, for loss sustained upon products and construction machinery and equipment, and such other damages as Contractor may have sustained as a result of the termination of this Agreement.
ARTICLE 6 -    Compliance With Laws
6.1   Compliance with Laws. Contractor shall give the required notices and comply with the laws, ordinances, rules, regulations, or codes which are or become in force during the performance of the construction of the Home and which relate to the construction, to the preservation of the public health, and to construction safety.
ARTICLE 7 -    INSURANCE
7.1   Obligation to Insure. Contractor shall obtain and maintain, at its own expense, general contractors liability insurance in connection with the construction of the Home.
ARTICLE 8 -    Warranty
8.1   ONHWP Warranty. Contractor hereby warrants that the Home will be built in a good and workmanlike manner consistent with the terms and conditions of this Agreement. Contractor further warrants that:
[Set out terms and conditions of applicable Warranty]
The foregoing warranties shall constitute Contractors only warranty, express or implied, in respect of any aspect of construction of the Home and further shall be the full extent of Contractors liability for defects in materials or workmanship or damage, loss or injury of any sort. Some settlement of the land around the Home is to be expected and Owner shall repair minor settlement including driveway settlement.
ARTICLE 9 -    General Provisions
9.1   Notices. All notices under this Agreement shall be in writing and shall be deemed to have been duly given (i) on the date of service if served personally on the party to whom notice is given; (ii) on the day of transmission if sent via facsimile transmission to the facsimile number given below, provided telephone confirmation of receipt is obtained promptly after completion of transmission; (iii) on the business day after delivery to an overnight courier service; or (iv) on the fifth day after mailing, provided receipt of delivery is confirmed, if mailed to the party to whom notice is to be given, by first class mail, registered or certified postage prepaid, properly addressed and return receipt requested, to the party as set forth below:
If to Contractor:
[Address of Contractor]
If to Owner:
[Address of Owner]
9.2   Waiver. Except as otherwise expressly set out herein, no waiver of any provision of this Agreement shall be binding unless it is in writing.
9.3   Execution by Facsimile. The signature of any of the parties hereto may be evidenced by a facsimile copy of this Agreement bearing such signature.
9.4   Counterparts. This Agreement may be signed in one or more counterparts, each of which so signed shall be deemed to be an original, and such counterparts together shall constitute one and the same instrument. Notwithstanding the date of execution of any counterpart, each counterpart shall be deemed to bear the effective date set forth above.
9.5   Governing Law. This Agreement shall be governed by and construed in accordance with the laws of [City in which Property is Located (ie. Los Angeles)], [State in which Property is Located (ie. California)].
9.6   Sections and Headings. The use of sections and headings is for convenience of reference only and shall not affect the interpretation of this Agreement.
 
9.7   Assignment. Neither party to this Agreement shall assign this Agreement or a portion thereof without the written consent of the other, which consent shall not be unreasonably withheld.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first written above.
 
 
 
 
 
Witness
 
[NAME OF OWNER]
 
 
 
 
 
 
 
Witness
 
[NAME OF CONTRACTOR]
 
 
Schedule “ALayout of Home
[Detailed Layout of Home]
 
 
Schedule “BDetails of Home
[Details and Finishes of Home]
 
Schedule “CPayment Schedule
[Payment Schedule (see example below)]
1.   Signing of Agreement
5%
2.   Completion of Foundation Wall
10%
3.   Completion of framing and trusses (excluding boxing) and shingles for roof
15%
4.   Rough in plumbing, heating, electrical (1st and 2nd floor),installation of window
15%
5.   Exterior finish (stucco)
15%
6.   Floor concrete, garage floor concrete, porch concrete, dry wall, insulation, taping, stairs installation, duct and furnace installation
15%
7.   Plaster work, wood floor (not stain), finishing of the kitchen and vanities cabinet, marbel and ceramic tile, fixture plumbing installation, trim work
15%
8.   On completion the painting, railing and drive way inter locking, and backyard sod
5%
9.   Final completion and approval from building inspector for final inspection
5%
 
100%
 
Number of Pages11
DimensionsDesigned for Letter Size (8.5" x 11")
EditableYes (.doc, .wpd and .rtf)
UsageUnlimited number of prints
Product number#28994
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.
 
 
New Home Construction Agreement
(Cost Plus)

 

THIS AGREEMENT made as of [Date of Agreement (ie. July 1, 2002)] between [Name of Owner] ("Owner") of [Address of Owner] and [Name of Contractor] ("Contractor") of [Address of Contractor].
WHEREAS:
(A)   Owner owns the Property described below; and
(B)   Owner wishes to retain Contractor to build a new home on the Property;
NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1 -    INTERPRETATION
1.1   Definitions. In this Agreement, the following words and phrases will have the following respective meanings:
(a)   Agreement” means this Agreement and all schedules and attachments hereto.
(b)   Commencement Date” means the date upon which a building permit is issued for the construction of the Home.
(c)   Home” means the home to be constructed on the Property in accordance with the terms and conditions of this Agreement.
(d)   Property” means the property located at [Address of Property].
(e)   Substantial Completion of the Home” means completion of the Home such that it is ready for use or is being used for the purpose intended, notwithstanding that some finishes or other work has not been completed.
(f)   Term” means the period between the Commencement Date to Substantial Completion of the Home.
(g)   Working Day” means a day other than a Saturday, Sunday, or a holiday which is observed by the construction industry in the City in which the Property is located.
1.2   Prior Agreements. This Agreement supersedes all prior negotiations, representations, or agreements, either written or oral, relating in any manner to the Home, including any bidding documents that are not expressly made a part of this Agreement.
1.3   Amendments. This Agreement may be amended by written agreement signed by all parties hereto.
1.4   Currency. All currency amounts in this Agreement are in U.S. funds unless expressly otherwise provided.
1.5   Successors and Assigns. This shall enure to the benefit of and be binding upon the parties hereto, their respective heirs, legal representatives, successors, and assigns.
ARTICLE 2 -    Construction of THE HOME
2.1   Construction of Home. Contractor agrees to build the Home on the Property in accordance with the terms and conditions of this Agreement and in the manner provided for in this Agreement. Contractor will use its best efforts to achieve Substantial Completion of the Home within [Number of Months it is expected to take to Complete Construction of Home] months after the Commencement Date.
2.2   Specifications of Home. The Home shall be constructed in accordance with the layout specified in Schedule “A” hereto and the details and finishes specified in Schedule “B” hereto, and shall be constructed in accordance with the plans and drawings mutually approved by the parties hereto.
2.3   Changes. There shall be no changes to the layout, details, specifications, drawings or finishes of the Home unless such changes have been mutually agreed to in writing by the parties hereto.
2.4   Access to Home. Owner shall have access to the Home during construction at reasonable times, provided that Owner gives Contractor reasonably prior notice requiring any such access.
2.5   Control over Construction. Contractor shall have total control over the construction of the Home and shall effectively direct and supervise the construction of the Home so as to ensure conformity with this Agreement. Contractor shall be solely responsible for construction means, methods, techniques, sequences, and procedures and for co-ordinating the various parts of the construction of the Home under this Agreement.
ARTICLE 3 -    CONTRACT PRICE AND PAYMENT
3.1   Contract Price.Owner agrees to pay Contractor the actual cost to Contractor of all labour (including his own time at the rate of $[hourly rate] per hour), materials, permits and all other proper charges in connection with this Agreement, plus a commission of [Commission Percentage]% on the total cost aforesaid; provided that in any event the total cost plus commission shall not exceed the sum of $[Maximum Commission Amount] and Owner shall not be liable to pay more than the aforementioned sum except for extras, agreed to in writing, and the commission on them. Contractor shall invoice Owner in accordance with the payment schedule attached hereto as Schedule “C
3.2   Subcontracts, Discounts. Contractor shall order all materials and shall take out all subcontracts, and shall endeavour to obtain all discounts, the saving to be passed on to Owner.
3.3   Lien Holdback. The lien holdback shall be withheld in accordance with the applicable lien legislation when paying for trades, materials and subcontractors.
3.4   Interest on Overdue Payments. If Owner fails to make payments as they become due under the terms of this Agreement, interest at the rate of eighteen percent (18%) per annum on such unpaid amounts shall also become due and payable until payment. Such interest shall be compounded on a monthly basis.
ARTICLE 4 -    DELAYS
4.1   Delay Caused by Owner. If Contractor is delayed in the completion of the construction of the Home by an action or omission of Owner or anyone employed or engaged by them directly or indirectly, contrary to the provisions of this Agreement, then the Term shall be extended for such reasonable time as may be required by Contractor, and Contractor shall be reimbursed by Owner for reasonable costs incurred by Contractor as the result of such delay.
4.2   Delay Caused by Public Authority. If Contractor is delayed in the completion of the construction of the Home by a stop work order issued by a court or other public authority and providing that such order was not issued as the result of an act or fault of Contractor or any person employed or engaged by Contractor directly or indirectly, then the Term shall be extended for such reasonable time as may be required by Contractor and Contractor shall be reimbursed by Owner for reasonable costs incurred by Contractor as the result of such delay.
4.3   Unavoidable Delay. If Contractor is delayed in the completion of the construction of the Home by labour disputes, strikes, lock-outs (including lock-outs decreed or recommended for its members by a recognized contractors' association, of which Contractor is a member or to which Contractor is otherwise bound), fire, unusual delay by common carriers or unavoidable casualties, or without limit to any of the foregoing, by a cause beyond Contractor's control, then the Term shall be extended for such reasonable time as may be required by Contractor. The extension of time shall not be less than the time lost as the result of the event causing the delay, unless Contractor agrees to a shorter extension. Contractor shall not be entitled to payment for costs incurred by such delays unless such delays result from actions by Owner.
ARTICLE 5 -    CONTRACTOR'S RIGHT TO STOP Work
5.1   Insolvency of Owner. If Owner should be adjudged bankrupt, or makes a general assignment for the benefit of creditors because of Owner's insolvency, or if a receiver is appointed because of Owner's insolvency, Contractor may, without prejudice to any other right or remedy Contractor may have, by giving Owner or receiver or trustee in bankruptcy notice in writing, terminate this Agreement.
5.2   Failure to Pay. Contractor may notify Owner in writing that Owner is in default of Owner's contractual obligations if Owner fails to pay Contractor when due any amounts owing under this Agreement.
5.3   Compensation for Default. If Contractor terminates this Agreement under the conditions set out above, Contractor shall be entitled to be paid for all work performed to the date of termination, including reasonable profit, for loss sustained upon products and construction machinery and equipment, and such other damages as Contractor may have sustained as a result of the termination of this Agreement.
ARTICLE 6 -    Compliance With Laws
6.1   Compliance with Laws. Contractor shall give the required notices and comply with the laws, ordinances, rules, regulations, or codes which are or become in force during the performance of the construction of the Home and which relate to the construction, to the preservation of the public health, and to construction safety.
ARTICLE 7 -    INSURANCE
7.1   Obligation to Insure. Contractor shall obtain and maintain, at its own expense, general contractors liability insurance in connection with the construction of the Home.
ARTICLE 8 -    Warranty
8.1   ONHWP Warranty. Contractor hereby warrants that the Home will be built in a good and workmanlike manner consistent with the terms and conditions of this Agreement. Contractor further warrants that:
[Set out terms and conditions of applicable Warranty]
The foregoing warranties shall constitute Contractors only warranty, express or implied, in respect of any aspect of construction of the Home and further shall be the full extent of Contractors liability for defects in materials or workmanship or damage, loss or injury of any sort. Some settlement of the land around the Home is to be expected and Owner shall repair minor settlement including driveway settlement.
ARTICLE 9 -    General Provisions
9.1   Notices. All notices under this Agreement shall be in writing and shall be deemed to have been duly given (i) on the date of service if served personally on the party to whom notice is given; (ii) on the day of transmission if sent via facsimile transmission to the facsimile number given below, provided telephone confirmation of receipt is obtained promptly after completion of transmission; (iii) on the business day after delivery to an overnight courier service; or (iv) on the fifth day after mailing, provided receipt of delivery is confirmed, if mailed to the party to whom notice is to be given, by first class mail, registered or certified postage prepaid, properly addressed and return receipt requested, to the party as set forth below:
If to Contractor:
[Address of Contractor]
If to Owner:
[Address of Owner]
9.2   Waiver. Except as otherwise expressly set out herein, no waiver of any provision of this Agreement shall be binding unless it is in writing.
9.3   Execution by Facsimile. The signature of any of the parties hereto may be evidenced by a facsimile copy of this Agreement bearing such signature.
9.4   Counterparts. This Agreement may be signed in one or more counterparts, each of which so signed shall be deemed to be an original, and such counterparts together shall constitute one and the same instrument. Notwithstanding the date of execution of any counterpart, each counterpart shall be deemed to bear the effective date set forth above.
9.5   Governing Law. This Agreement shall be governed by and construed in accordance with the laws of [City in which Property is Located (ie. Los Angeles)], [State in which Property is Located (ie. California)].
9.6   Sections and Headings. The use of sections and headings is for convenience of reference only and shall not affect the interpretation of this Agreement.
 
9.7   Assignment. Neither party to this Agreement shall assign this Agreement or a portion thereof without the written consent of the other, which consent shall not be unreasonably withheld.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first written above.
 
 
 
 
 
Witness
 
[NAME OF OWNER]
 
 
 
 
 
 
 
Witness
 
[NAME OF CONTRACTOR]
 
 
Schedule “ALayout of Home
[Detailed Layout of Home]
 
 
Schedule “BDetails of Home
[Details and Finishes of Home]
 
Schedule “CPayment Schedule
[Payment Schedule (see example below)]
1.   Signing of Agreement
5%
2.   Completion of Foundation Wall
10%
3.   Completion of framing and trusses (excluding boxing) and shingles for roof
15%
4.   Rough in plumbing, heating, electrical (1st and 2nd floor),installation of window
15%
5.   Exterior finish (stucco)
15%
6.   Floor concrete, garage floor concrete, porch concrete, dry wall, insulation, taping, stairs installation, duct and furnace installation
15%
7.   Plaster work, wood floor (not stain), finishing of the kitchen and vanities cabinet, marbel and ceramic tile, fixture plumbing installation, trim work
15%
8.   On completion the painting, railing and drive way inter locking, and backyard sod
5%
9.   Final completion and approval from building inspector for final inspection
5%
 
100%
 

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