5 Things Every Homeowner Should Negotiate Into a Residential Construction Contract
Most homeowners spend a lot of time deciding which contractor to hire and considerably less time thinking about the contract they are signing. That can be a costly mistake. A construction contract does much more than identify the work to be performed. It determines what the contractor is required to do, when the contractor is required to do it, when the homeowner has to pay, and who bears the risk when something goes wrong.
In most residential construction projects, the contractor provides the contract. Not surprisingly, those contracts are generally written to protect the contractor. That does not mean a homeowner has to accept the contract as written. Before signing, homeowners should carefully review the agreement and, at a minimum, consider negotiating the following five terms.
1. A Prevailing-Party Attorney’s Fees Provision
One of the first provisions I recommend homeowners ask for is a clause allowing the prevailing party in a dispute to recover reasonable attorney’s fees and costs.
This is important because many legitimate construction disputes involve enough money to substantially harm a homeowner, but not enough money to make litigation economically practical. If a contractor causes $15,000 or $20,000 in damages, but the homeowner has to spend a substantial portion of that amount on attorney’s fees to recover it, the homeowner may have little practical choice but to walk away from an otherwise valid claim. The inability to recover attorney’s fees can therefore significantly change the economics of a construction dispute.
For that reason, I generally recommend a straightforward prevailing-party attorney’s fees provision that applies equally to both sides. If the contractor properly performs the work and the homeowner wrongfully refuses to pay, the contractor receives the benefit of the provision. If the contractor breaches the agreement and the homeowner is forced to pursue a claim, the homeowner receives the same protection.
2. A Definite Deadline for Completion
Every residential construction contract should tell the homeowner when the project will be completed. Surprisingly, many do not.
Homeowners frequently sign contracts stating that construction will begin “approximately” on a particular date, that any completion date is merely an estimate, or that the contractor cannot be held responsible for delays. Other contracts provide no meaningful completion date at all. The result is that a project that the homeowner expected to take three months can drag on for six months, nine months, or longer, while the contractor points to a contract that never actually required completion by any particular date.
There is no reason a contractor should be given an unlimited amount of time to complete a project. That does not mean the deadline has to be unreasonable or inflexible. The parties can negotiate a realistic construction period, and the contract can provide appropriate extensions for circumstances such as approved change orders, owner-caused delays, permitting issues outside the contractor’s control, severe weather, material shortages, or other genuinely unforeseeable events.
But there should still be a latest date by which the contractor is required to complete the project, subject to clearly defined extensions.
If a contractor is willing to tell you when the project will be finished but refuses to put that commitment in the contract, that should be a red flag.
3. A Reasonable Payment Schedule Tied to Actual Progress
The payment schedule can be just as important as the total contract price. As a general rule, I recommend that homeowners avoid paying more than approximately 10% of the contract price as an initial deposit, unless there is a legitimate project-specific reason for a larger payment.
More importantly, homeowners should avoid payment schedules that allow the contractor to get substantially ahead of the work. It may be perfectly reasonable for a homeowner to fund significant materials that actually need to be purchased for the project. It is much harder to justify a payment schedule under which the contractor receives 50%, 75%, 90%, or even 100% of the contract price while only a fraction of the work has been completed.
Payments should instead be tied, whenever possible, to objective and identifiable construction milestones. If the project is approximately 50% complete, the contractor generally should not already have 90% of the contract price. The more money the homeowner has already paid, the less leverage the homeowner has if the contractor stops showing up, falls behind schedule, performs defective work, or walks away from the project.
Homeowners should also look beyond the number of payments listed in the contract and pay attention to when those payments actually become due. A payment schedule may appear reasonable because the contract divides the price into five or six installments. But if 10% is due at signing, another 30% when materials are delivered, another 30% when work begins, and another large payment shortly thereafter, the contractor may have received 70% or more of the contract price before completing a meaningful percentage of the work.
In Florida, there is another reason to pay attention to large deposits. Section 489.126, Florida Statutes, imposes certain permitting and commencement obligations when a contractor receives an initial payment exceeding 10% of the contract price for residential work. But even apart from those statutory protections, keeping payments reasonably aligned with actual construction progress is simply good risk management for the homeowner.
4. A Clearly Defined Contract Price, Preferably a Fixed Price
This may sound obvious, but the contract should clearly establish what the homeowner is actually agreeing to pay.
There are many different ways construction contracts can be structured, but two common pricing models are fixed-price and cost-plus contracts. Under a fixed-price contract, the contractor agrees to perform a defined scope of work for an agreed price. Unless the scope changes or another event identified in the contract occurs, the homeowner knows what the project is supposed to cost.
Under a cost-plus agreement, the homeowner instead pays the contractor’s project costs, such as labor, materials, subcontractors, and other expenses, plus an agreed contractor fee or markup. The obvious risk is that the homeowner does not necessarily know what the final price will be when the contract is signed. If labor takes longer than anticipated, materials cost more than expected, additional expenses arise, or the project is managed inefficiently, those additional costs can ultimately be passed along to the homeowner.
That does not mean every cost-plus contract is improper. There are projects and circumstances where cost-plus pricing makes sense. But for the average homeowner, I generally recommend negotiating a fixed contract price whenever reasonably possible, together with a requirement that increases in the contract price be documented through written change orders approved by the homeowner.
A homeowner should be particularly cautious about an agreement that contains neither a true fixed price nor meaningful controls over cost increases. Before signing, you should be able to answer a very basic question: What am I agreeing to pay for this project?
5. A Detailed Scope of Work
The contract should clearly say what the contractor is actually going to do. Terms such as “complete remodel,” “turnkey renovation,” or "replace roof” may sound descriptive, but they can leave enormous room for disagreement once construction begins.
A good scope of work should identify, where applicable:
The specific work being performed;
The areas of the property included in the project;
Demolition and removal work;
The materials being supplied;
Manufacturers, products, models, grades, colors, or other material specifications when important;
Installation requirements;
Permitting responsibilities;
Cleanup and debris removal;
Work that is specifically excluded from the contract; and
Any other project-specific item that is important to the homeowner.
The more detailed the scope of work, the less room there is later for one party to say, “I thought that was included,” while the other says, “That was never part of the price.” A detailed scope also makes it considerably easier to determine whether a requested item is actually additional work requiring a change order or simply part of what the contractor originally agreed to provide.
If a particular material, feature, finish, method of installation, or other requirement is important to you, put it in the contract. Do not rely on someone telling you, “Don’t worry, we’ll take care of it.” If it matters enough that you would be upset if it were not done, it matters enough to put in writing.
Honorable Mentions
The five provisions above are not the only terms homeowners should consider. Depending on the size and nature of the project, several other contract provisions can be extremely important.
Written Change Orders
The contract should establish a clear procedure for changes to the scope of work. Ideally, a change order should be in writing and identify both the additional or reduced cost and any corresponding change to the construction schedule.
Without a clear change-order process, homeowners can reach the end of a project only to learn that the contractor believes thousands of dollars in additional work was verbally authorized along the way. Likewise, contractors can find themselves performing additional work that an owner later claims was included in the original scope. Requiring written change orders helps both parties know exactly when the deal has changed.
Warranty
The contract should clearly identify any workmanship warranty being provided, how long the warranty lasts, what it covers, what it excludes, and how warranty claims are handled. Homeowners should be cautious about relying solely on vague promises that the contractor will “stand behind the work.”
Permits and Inspections
The agreement should identify who is responsible for obtaining required permits and scheduling inspections. For work requiring permits, homeowners should also be cautious about contractors who suggest avoiding the permitting process simply to save time or money.
Lien Releases
For projects involving subcontractors and suppliers, the payment provisions should address appropriate lien releases as payments are made. Paying the general contractor does not necessarily mean everyone downstream has been paid, and a homeowner does not want to reach the end of a project having paid the contract price only to discover unpaid subcontractors or suppliers asserting claims relating to the property.
Retainage, Final Payment, and the Punch List
Homeowners should also consider negotiating retainage, which simply means withholding a portion of the contract price until the project has actually been completed. For example, instead of paying 100% of the contract price before the final walkthrough, the agreement might provide that the homeowner retains the final 5% or 10% until final completion.
Retainage is important because construction projects frequently reach a point where they are substantially complete but not actually finished. At that stage, the homeowner and contractor will typically identify a punch list of remaining items that need to be completed or corrected. That might include paint touchups, damaged finishes, missing hardware or fixtures, incomplete trim, adjustments, cleanup, corrections to defective work, or other relatively minor items necessary to truly finish the project.
The problem arises when the contractor has already received essentially all of its money before the punch-list work is completed. Once the contractor has been paid 100%, the homeowner has lost one of the most effective incentives for getting the remaining items finished promptly.
A better payment structure leaves a meaningful final payment or retainage due only after the project has been completed, legitimate punch-list items have been addressed, required inspections have been completed, and any required closeout documentation has been provided. The goal is not to unfairly withhold money from the contractor. The goal is to make sure the payment schedule gives both parties an incentive to completely perform their obligations under the contract.
Red Flags Before You Sign
No single contract provision can tell you whether a contractor is good or bad, but certain issues should cause a homeowner to ask more questions before signing.
Potential warning signs include:
The contractor’s license number does not appear on the contract;
The contractor refuses to provide a meaningful completion deadline;
The contractor demands a large amount of money before meaningful work is performed;
The payment schedule puts the contractor substantially ahead of the actual progress of the work;
The scope relies on vague descriptions such as “turnkey” without explaining what is actually included;
Important materials or specifications are omitted;
The contractor relies heavily on verbal promises but resists putting those promises in writing;
The contractor refuses to consider reasonable revisions because it is supposedly a “standard contract”; or
The contract gives the contractor extensive remedies if the homeowner defaults while providing little protection to the homeowner if the contractor defaults.
Florida law requires a contractor’s certification or registration number to appear on its contracts, among other documents and advertisements, so the absence of that information is particularly worth investigating.
None of these issues necessarily means that a contractor intends to do something wrong. But the time to ask questions is before you sign the contract and before you hand over a substantial amount of money.
If It Is Important, Put It in the Contract
The simplest advice I can give a homeowner before signing a construction contract is this: If something is important to you, put it in writing.
Do not assume something is obvious. Do not assume the salesperson’s promise will be remembered six months later. Do not assume that everyone will interpret a vague provision the same way you do. And do not rely on the expectation that everyone will simply “do the right thing” if a disagreement develops.
Most construction projects begin with everyone expecting the project to go well. The contract is there for what happens when it does not. A good contract cannot guarantee that there will never be a dispute, but it can clearly establish the parties’ expectations and substantially reduce the number of issues left open for argument later.
If you are preparing to spend tens or hundreds of thousands of dollars improving your home, spending some additional time negotiating the contract before construction begins may be one of the most important things you do during the entire project.
One Final Piece of Advice: Always Get a Second Opinion
Before signing a construction contract, always get at least one additional estimate or proposal from another contractor for the same scope of work. Comparing multiple proposals can help you determine whether the price is reasonable, whether important work or materials are missing from one contractor’s scope, and whether one proposal contains terms or payment requirements that are outside the norm.
If you are in a dispute with a contractor, contact Keough Construction Lawto schedule a consultation at (727) 295-1692.
Prepared by Attorney Kyle J. Keough on August 18, 2026.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Reading this post does not create an attorney-client relationship. If you are facing a legal issue, you should consult with a qualified attorney licensed to practice in your jurisdiction.
