Have you finally found the right renovator for your home? If that’s a yes, then signing the renovation contract will probably the next thing you’re worried about.
Your signature on the contract represents that you are legally liable to pay for the renovation, according to the terms stated on it. And since renovation is considerably a large ticket item, it’s understandable why most of us tend to be extra cautious and anxious about signing on the dotted line.
To help us feel more confident signing on the dotted line, here’s a handy guide on how to read our renovation contracts and the key things to check before we sign them!
How to read your renovation contract:
Alright, so first things first! If you’re totally new to renovation, you might be wondering how a renovation contract even looks like. Typically, renovation contracts will bear these details:
Business details of your renovator
In most cases, the contract will indicate the renovator’s company name and the contact details of the renovator/interior designer managing your project.
Your renovation details
These typically include your name, contact details and the address of the home you are renovating. If you are planning to sign a package from your renovator much earlier than the actual start date of your renovation, then the contract should also indicate the validity period of the contract.
Renovation scope and pricing
This is the most crucial part of the contract. This lists down the details of all the works that the renovator agrees to do for you, at the stated price. Should there be disputes during the renovation, these details in the contract will be used to determine what was agreed upon. So, never ever merely skim through this; make sure you go through the details line-by-line.
Many of Nestr’s renovators will break down the renovation works into different sub-segments, so that it is easier for you to understand the content. Most of the time, they are categorized based on the rooms where the reno works are needed. Within each sub-segments, the contract may then further break it down into the different renovation job scopes e.g. wet works, plumbing, carpentry. And the contract will then subsequently list down all the different renovation tasks needed in detail and their costings. Here’s a snippet of how it may look like:
Terms and conditions
The next most important part of the contract is the Terms & Conditions segment and its fine prints. This segment specifies key details like:
- When payment is expected
- How payment is expected to be made e.g. cash, cheque
- Whether there are warranties to the reno works
- Whether there are cancellation charges
- How long the contract is valid for
- Whether there will be additional charges for changes in renovation scope
- Whether there are any additional works that will be billed separately by a third party.
5 Key details to check in the contract
Alright, so we know what should be included in the contract. But, what exactly should we be scrutinizing in the contract? Here are the 5 key details your renovation contract should never get wrong!
1) Ensure there is no double counting
Remember how renovation works are usually categorized into different segments in the contract? Although mistakes like double counting should never happen, there are times where the renovator might have accidentally listed the same particular renovation task under 2 different segments. This would mean paying double for the same work, so do keep a look out, and make sure nothing’s double counted!
2) Check if the costs are before or after GST
This is particularly important if you are engaging those bigger and more established renovation firms, where GST charges are applicable. Always check if GST is applicable for your renovation project. And if GST is applicable, check if the prices quoted in the contract are before or after GST.
A 7% charge of a $40,000 project is $2,800. Yes, this GST charge can increase your total bill substantially!
3) Check that the reno details are correct
The next thing to check in your contract are the details of the renovation works, like:
- Are the dimensions listed on the contract correct?
For most carpentry works, the prices are quoted based on the rough dimensions you have requested for. If you are not familiar with the inch/feet measurements, always convert it into centimeters/meters and double check against your floor plan to confirm the rough dimensions given are correct.
- Are the materials listed correctly?
This is especially important if you are intending to pay more for a certain material of a product. To avoid future disputes and complications, ensure that the said material is mentioned explicitly in the contract. If your renovation scope requires heavy customization, it is advisable to get your renovator to do up a 3D visualisation of your new home, like the image below. This helps to ensure the design you have in mind matches with what the renovators have understood.
- Are all the renovation works listed?
If your renovation scope is heavy, always double check that all the changes you want are listed in the contract. (Unless you don’t mind ending up with unexpected bills halfway through your renovation!)
If there are any parts of the renovation contract that you are not sure of, always double confirm it with your renovator. If need be, do get them to update the contract after your clarification. A good renovator would be happy to clear the doubts with you upfront. Because this also saves them from future disputes, and helps them resolve all potential uncertainties, before they start work and invest time and effort into it.
4) Confirm what’s not included in the contract
You’ll be surprised to know that not everything that needs to be done are included in the renovation contract. For instance, these are the two common renovation scopes that are often left out:
- Reno works where their costings cannot be estimated upfront
For instance, electrical and plumbing works cannot be estimated merely from the floor plan alone. In most cases, the renovator would require a proper site visit before he can give you an estimate of the costs. So, if you’re signing the reno contract before you get your keys, you might want to buffer additional costs for such works.
- Reno works that has to be done by a third party
Some works like the installation of the air-con or the clearing of renovation debris has to be done by a third party. For such works, some renovators will only help you source for the service provider, give you the estimated cost and leave it to you to pay the third party directly. So, be sure to take these costs into consideration as well.
If you’re not too sure about the total additional costs not included in the contract, you can always check with your renovator to give you their rough guesstimate. Given their years of experience in the field, they should be able to give you a fairly accurate estimate. 🙂
5) Be sure about the payment terms
Most contracts will mention about the payment schedule under the Terms & Conditions segment. As a common practice, renovators will usually require you to pay 15-30% of the total cost upfront upon signing the contract, and then pay the remaining amount after they complete the different stages of the renovation. At times, the payment dates can be fairly close together. So if your cash flow is not so liquid, you might want to negotiate the payment terms with your renovator before the start of renovation.
Also, you should be cautious about any “freebies” that the renovator might offer to you in exchange for engaging them. For instance, they could be giving you a free BTO defect inspection. Or they could be asking you to pay for a 3D mockup of your new home design that will later be waived off, after you sign the full package. Whatever the case maybe, ensure that your promised discounts are mentioned explicitly in writing. Lest, they turn out to be mere empty baits.