What goes in a construction contract
A residential construction contract that holds up in court (and prevents most disputes from getting there in the first place) covers eight categories. Skip any one and you’ve created a hole that a determined customer or attorney can drive a truck through.
- Party identification. Full legal names of contractor and customer, contractor’s license number (where applicable), business address, and contact info. If you’re an LLC, use the LLC name — not your personal name.
- Scope of work.Specific. Materials by brand and model when relevant. Finish levels (paint grade vs. cabinet grade trim). Inclusions AND exclusions (“Demo includes existing flooring; does NOT include asbestos abatement if discovered.”). The vaguer this section, the more disputes you’ll have.
- Price and payment schedule. Total contract price, deposit amount and due date, progress payment milestones tied to specific completed work, retainage amount and release condition, final payment trigger.
- Schedule. Start date, substantial completion target, definition of substantial completion, weather and material-delivery delay clause.
- Change-order process. Required: written change order signed by both parties before work begins. Without this, every verbal change becomes a he-said she-said.
- Warranty.Workmanship warranty period (1 year is standard), what’s covered, what excludes the warranty (customer modifications, normal wear, acts of nature). Manufacturer warranties on materials passed through to the customer.
- Insurance and liability. Confirmation that you carry general liability and workers’ comp insurance. Limitation of liability clause capping damages at the contract price.
- Dispute resolution and termination. Mediation-first arbitration clause, governing state law, and conditions under which either party can terminate.
The clauses that prevent the most common disputes
Scope creep
The most common dispute. Customer says “you said you were going to…” — usually about something not in writing. Prevent with: explicit inclusions, explicit exclusions, and a written change-order requirement. The change-order requirement is critical — it converts every “can you also do X” conversation into a billable change order or a documented refusal. Without it, you’ll find yourself doing extra work for free or arguing about it for hours.
Payment timing
Tie progress payments to milestones, not dates. “Payment 2 due upon completion of rough framing inspection” is enforceable. “Payment 2 due 30 days from start” is not — if the customer delayed approvals or a permit office is backed up, you can’t hold them to a calendar payment when you haven’t hit the milestone. State each milestone as a specific, verifiable event.
“Substantially complete” vs “done”
The end of a job has two stages: substantially complete (the project is functional, customer can use it, only minor punch-list items remain) and final completion (every punch-list item finished). Most contracts trigger final payment at substantial completion with a retainage held back for punch-list. Define what “substantially complete” means in your specific scope — for a kitchen remodel, it’s typically “all major systems functional, all cabinetry installed, electrical and plumbing rough-ins passed final inspection.” Without this definition, the customer can withhold final payment over a missing trim piece.
State-specific add-ons
Some states require specific clauses on residential contracts:
- California: 3-day right of cancellation notice on contracts over $500 (Business & Professions Code §7159).
- New York:Contractor’s license number must appear on every contract.
- Florida: Lien rights notice required on contracts over $2,500.
- Maryland: Specific consumer-protection language required on home-improvement contracts.
Always verify your state’s current requirements with your Contractors State License Board (or equivalent). Add jurisdiction-specific language to this template before signing.
How to use this template
Read through each section and fill in the bracketed fields. Strike anything that doesn’t apply (line through, both parties initial). For your first 2–3 contracts, have an attorney licensed in your state review the modifications you’ve made — it’s a one-time $200–$400 expense that catches state-specific gaps. After that, you can reuse the same vetted template for similar projects.
For complex high-value jobs (over $50K, or anything involving structural changes, easements, or shared property lines), use this template as a starting point but get an attorney to draft the final document. The cost is a fraction of one dispute.
Related contractor business resources
For pricing the work BEFORE you put it in the contract, see our construction estimate template. If you’re hiring subcontractors as part of the project, you’ll need a separate subcontractor agreement for each sub. For lawn care or hardscape work specifically, our landscaping contract template adds the plant warranty and seasonal-work clauses that construction-only contracts miss.