5 contractor-agreement clauses that are tight and clear, so you're never left with a half-finished job

The number-one problem for people building a house has to be "the contractor walking off the job", which not only costs a lot of money but also leaves stress and an unfinished house behind. Having a contractor agreement that is tight and fair is therefore the homeowner's best protection. Here are the key clauses your contract must include so you can manage the work with peace of mind and safely.

5 key clauses that must be spelled out clearly

Before you sign and transfer the deposit, check that the contract covers these 5 points in full:

• 1. Payment schedule by work stage (payment milestones): never pay a large sum in advance; state clearly which stage of work must be complete for each instalment, e.g. instalment 1 is paid when the floor is poured and the columns are up
• 2. Material specifications (BOQ) and drawings as annexes: specify the brand, model, size and colour of materials in detail, to prevent lower-grade materials being swapped in
• 3. Completion date and late penalties: state the start and handover dates clearly, and set a daily penalty (e.g. 0.05% - 0.1% of the contract value per day) if the work isn't finished on time without good reason
• 4. Retention money: withhold about 5-10% of the contract value from the final instalment and pay it back 30-90 days after handover, to see whether any leaks or hidden damage appear
• 5. The right to terminate the contract: state the conditions under which the homeowner can terminate immediately, e.g. the contractor stops work for more than 7-15 consecutive days without giving a reason

Special precautions for structural and electrical work

For high-risk work such as structure, columns, beams and electrical systems, you shouldn't let a general contractor proceed without a specialist in charge. Structural work needs an engineer to sign off the drawings and supervise the work for life safety, and electrical work should be done only by an electrician with a certificate of competence (electrician's licence), because substandard work risks current leakage or fire in the future.

Checklist of documents to attach to the contract

To be as watertight as possible, before you put pen to paper, remember to request and attach these documents as evidence:

• Copy of the contractor's ID card and house registration (or company registration documents)
• Copy of the house drawings and the BOQ, initialled on every page
• Payment schedule signed and acknowledged by both parties

A clear contract may take a little longer to check, but believe us, it's far better than chasing problems after the contractor has walked off the job.