Agreement To Construct A House

If you are one of those privileged individuals about to construct a house, congratulations on your dream coming true. Now that you have sourced your funds and shortlisted your contractor; Let us mention some things that you ought to keep in mind while drafting an agreement to construct a house. You may as well be a contractor about to create an agreement to construct a house.

An agreement to construct a house is signed between two parties one being an owner and the other being a contractor. The role of the contractor would be to plan, coordinate and supervise the construction of a new house based on the agreed budget.

What Is An Agreement To Construct A House?

An agreement to construct a house is a legal agreement signed between the owner of a plot and a contractor for construction of a house on that particular plot. The construction is based on the individual specifications of the owner. All sketches and plan may be prepared by an engineer of choice of the owner. It is the execution that shall be done by the contractor.

What To Include In An Agreement To Construct A House?

An Agreement to construct a house is a document of vital importance since it involves high value payments. It contains the details of the house to be constructed by the contractor along with the terms and conditions for the same including payment. Let us observe the details which need to be included in a construction agreement.

Details of Parties

Every agreement needs at least two parties. The first party shall be called the owner in this case and the second party, the contractor.

Purpose

The agreement may be for constructing an entire house building or a portion of the house.

This can be mentioned clearly along with the submission of the Plan/Drawing/Sketch.

Consideration

The amount payable to the contractor for executing and completing the works specified in the contract shall be mentioned. Details should be provided as to the initial payment made to the contractor and the manner in which remaining payments will be settled.

There shall be provisions made for setting off any amount payable by the contractor to the owner on account of breach of any terms from the amount payable to the contractor.

Covenants By The Owner

The promises to be made by the owner should include arranging for and supplying of the construction materials in time, as and when the requirements are specified by the contractor. If the contractor is the person responsible for arranging materials, the owner should make such payments in time.

Covenants by the Contractor

The main promise by the contractor shall be to construct and completely finish the building project for the owner on plot of land described in the plan according to the specifications and elevations given. The contractor shall be bound to observe the directions given by the owner or his/her consulting from time to time. No deviation should be allowed from such plans, specifications, elevations except with written consent from the owner.

Any unauthorised portions should be considered as gratuitously done and be dismantled by the contractor if required by the OWNER.

Term

One of the prime concerns about a construction agreement is the time spent. It will be against the interests of the owner if the work gets prolonged piling up the costs. The agreement should mention the date by which the house shall be handed over to the owner in a habitable condition.

Penalty

If the contractor fails to keep up his/her commitment regarding time, he/she shall be required to pay compensation to the owner at a rate fixed per day for each day exceeding the date of handover.

Force Majeure

A clause for force majeure can be added to acknowledge any delay that may occur due to factors beyond the control of the contractor, for example accidents, fires, natural disasters, mob violence, among others.

Subcontractors

Subcontractors may not be appointed for carrying out any individual tasks except after obtaining the consent and written approval of the owner. Such appointments should be at the absolute discretion of the owner.

Indemnity

It shall be the duty of the contractor to indemnify the owner against all claims, causes of action, compensation, damages, costs, and expenses arising out of any accident or injury, sustained by the owner or any guest due to negligence on part of the contractor or any of his/her worker.

Termination

The manner in which the agreement can be terminated should be specified. It may be through mutual agreement, or at the option of one party when there is a breach of agreement by the other party.

Dispute Jurisdiction

The recourse available to the parties in the event of breach of the terms should also be specified. It may be litigation under the courts located in a particular state or city.

Get Your Agreement Drafted At LegalDesk.com

LegalDesk.com is the answer for quick and effective legal documentation. We have pre-drafted templates that have been verified by lawyers that ready to be customised. LegalDesk.com’s custom drafting facility helps you create any agreement or legal document. You may be an owner or a contractor, we have solutions for all. Choose LegalDesk.com today.