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Builder contract

11 years ago

We are planning to build a new home and have recently chosen the builder. We are in contract negotiations now. He said he always uses the standard AIA contract form. Is that generally considered pretty comprehensive?

Comments (10)

  • 11 years ago
    last modified: 11 years ago

    Some of the AIA small project contract forms are very comprehensive and some are less so. Some contractors use forms that look like AIA forms and use the same numbers but are published by a contractor association. AIA forms are copyrighted and can be purchased online for a specific project. You pay of it, type in the first page information and then it can be downloaded.

    Which AIA form is being proposed, A105 (Lump sum, 11 pages) , A107 (Lump Sum or Cost of the Work, 20 pages) or something else? These forms combine the Agreement and General Conditions.

    Is there an architect involved?

  • 11 years ago

    Some things I would read carefully are the schedule, liquidated damages, how change orders are handled, and the entire document.

  • 11 years ago

    what state are you in? I thought builders generally avoid the AIA like the plague and try to use there own. You are very lucky he wants to use the AIA.


  • 11 years ago
    last modified: 11 years ago

    I've only had one contractor object to the use of an AIA contract form in many decades and he used the form for all of his subsequent projects.

    I am not aware of any liquidated damages provisions in the small project contract series from AIA and the contractor is unlikely to ask for it. This is a feature best reserved much larger commercial projects. I've never seen one added and I don't know how, as the administrating architect, I would enforce such provisions.

    It is usually necessary to add a section regarding Change Orders, Change Requests and Change Proposals and other administrative procedures.

    These short contracts are very basic and general; they are intended to be altered by crossing out or adding provisions. Fortunately they come with instructions.

  • 11 years ago

    I'm just finishing up a build that I had a very poor contract on. I have learned so much! Unfortunately, I'm never going to build again so lessons learned are too late. Absolutely have your attorney review your contract and make suggestions. I cannot say this loud enough but take it from someone who had to consult an attorney towards the end of her project! AND, make sure your contract requires lien waivers from each sub along the way!

  • 11 years ago

    All, thank you for the helpful suggestions. You have given me much to think about.

    It is good to know that the AIA forms are pretty standard in the industry. Does anyone know what the enforcement or penalties generally are if the project is running late for no good reason? Is there a standard way to handle this or does everyone do it differently?

  • 11 years ago

    Well, let me know when you find out! We are 10 weeks late but moving forward pretty decently now. Poor ChicagoDreamer is even later than that. I think she wants to filet her builder and feed him to the cats at this point.

    Like BirchPoint said - lots of lessons. Learned too late. I will never go through it again either. We have at least one more move in us but we wont be building a custom home again.

    Had one builder try to tell me that the AIA contract protects the architect but not the builder or the client. This builder only worked on cost plus on a two-page contract though. I did not hire him for obvious reasons. I don't know if what he said was true or not, but it did seem to be awfully carefully worded in places. I didn't trust it completely myself and my architect, sadly, was a bit shady himself.

    The builder I chose had his own contract that was quite comprehensive and so far it has served us both well, except for the delay part. I don't know if any builder is going to sign a contract with meaningful penalties for delays with a residential client.

    I, too, wish I had consulted an attorney for both the contracts with the architect and the builder. You need a lot of trust with the builder.

    Good luck!

  • 11 years ago

    I would also make sure there was language that specified that the most currently accepted best building practices be utilized! (Not sure about my grammar there, but you get my meaning.)

  • 11 years ago

    The best protection is a well prepared set of design documents and lien wavers. The AIA contracts are not common with homebuilders but their terms are well understood in courts because they are used for larger projects and written by experienced construction lawyers. But they are intended to be modified for each project so you need to understand what is appropriate for your project.

    Project delays are difficult to deal with. You can put an end date in the contract and if it gets far beyond that date you could sue for actual damages if you can prove them but not for penalties. Liquidated damages are simply pre-determined damages for avoidable delays. They must be based on realistic expected losses rather than arbitrary ones or penalties. Its a can of worms. A better approach is to provide a bonus that decreases after the time limit.