Unfair Terms in Building Agreements

Building agreements are essential legal documents that govern the relationship between builders and property owners. These agreements specify the terms and conditions of a construction project, including the costs, scope of work, timing, and responsibilities of each party. However, some builders may include unfair terms in these agreements that can put property owners at a disadvantage. In this article, we explore some of the most common unfair terms in building agreements and how to protect yourself from them.

1. Ambiguous pricing

Some builders may use vague or ambiguous pricing terms in their agreements, making it difficult for property owners to understand the true cost of the project. For example, a builder may quote a project “per square meter” without specifying what is included in that price. This can lead to misunderstandings and disputes later on. To avoid this, property owners should insist on a clear and detailed breakdown of the costs, including materials, labor, and any contingencies.

2. One-sided payment terms

Builders may include payment terms in their agreements that favor them over property owners. For example, a builder may require a large deposit upfront, or they may demand payment before the project is complete. This can put property owners at risk if the builder fails to complete the project or goes out of business. Property owners should negotiate payment terms that are fair and reasonable, such as paying a percentage of the total cost upfront and the balance upon completion.

3. Unilateral change orders

A change order is a written request to modify the scope of work, time or cost involved in a construction project. Some builders may include unilateral change order provisions in their agreements that allow them to make changes to the project without the property owner’s approval. This can result in unexpected costs and delays, as well as disputes between the builder and property owner. Property owners should insist on clear change order procedures that require the builder to obtain written approval before making any changes.

4. Limited warranties

Warranties are guarantees that a product or service will perform as promised. In building agreements, builders may offer limited warranties that exclude certain types of defects or only cover a limited period of time. This can leave property owners at risk of costly repairs if problems arise after the builder has left the site. Property owners should ensure that the builder provides a detailed warranty that covers all aspects of the project and lasts for a reasonable amount of time.

5. Arbitration provisions

Some builders may include arbitration provisions in their agreements that require any disputes to be resolved through arbitration rather than litigation. Arbitration can be faster and less expensive than going to court, but it can also limit the property owner’s legal rights and ability to appeal. Property owners should carefully review any arbitration provisions and consult with a lawyer before agreeing to them.

In conclusion, building agreements can be complex documents that require careful review and negotiation. Property owners should be aware of the most common unfair terms in these agreements and take steps to protect themselves from them. By working with a reputable builder and seeking the advice of a lawyer, property owners can ensure that their building project is completed on time, within budget, and according to their specifications.

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