Modular Homes Section

Modular Home Contracts

Once you have found a modular home builder with a project estimate that you like it is time to create a formal contract. This is when the legalese and fine print make their grand entrance. It is important that this contract is written, fully detailed and signed. There is no detail too small to not have included in your contract. If you want it in your modular home, it needs to be stated in your contract. If it is not specifically stated in your contract, your modular home builder may forget it, substitute it for a cheaper alternative or avoid it just to save money.

The modular home builder will have a standard contract that they will adjust to your personal building situation. The contract will probably be several pages. Before you agree to the contract and sign it, it is important to have a lawyer review it for you. I can guarantee you the modular home builder had a lawyer review their contract template to make sure it protects them. You need a lawyer to review it to make sure you are protected and getting everything you want. You should never sign a contract without having a lawyer review it.

Your lawyer will be looking for several key items to be included in your home construction contract. Here is a brief overview of some of these critical items you need included to protect yourself and your dream home.

Payment Schedule
Building a new home is a big project and it will require a good size of money. This money will need to be paid out on a schedule. The first installment will be the deposit before any work even starts. The contract should state when the next installments will be due and when the final payment will be due. The payment schedule will be mostly controlled by the rules made by the modular home manufacturer which the builder will have to follow. To avoid any misunderstanding make sure the form of payment is stated in the contract. You may need a certified bank check or a wire transfer.

Change Policy
Most construction project will have changes made to them during the construction process. This could be due to change of your personal preference or to deal with cost spikes in certain building supplies. The change order policy should be clearly defined. This should include when changes can happen and when they cannot. It should also discuss the fees of the changes and when the fees are due. It should also be clear about the documentation process of change orders and who will have the power to authorize the changes.

Cost Increases
The cost of building materials fluctuates over time. There is no good news here for you. The bad news is that you will never get a refund if building materials go on sale. Worse, you may be held responsible if the cost of building materials rise. Your contract should state what cost increases you are liable for and under what circumstances.

Life is not perfect and delays can happen. You should be prepared for them and understand what will happen if a delay occurs. The contract should state the penalties for delays caused by the builder and delays caused by the home buyer. It should also include a "Force Majeure" clause. This is a fancy way of saying if there is a freak act of god you will not be held liable.

The construction contract should state who is liable and needs to insure the home during the construction process. For example when the modules are being transported to your building site, who will insure them against being damaged in a car accident? If the crane catches while it is setting the home modules on the foundation and drops them on the ground, who will pay for those damages? Once the home is delivered and set on the foundation who is responsible if vandals damage the home before you can move into it? It is rare for any of this to occur but you should not take any chances when you are making the biggest purchase of your life. The contract should state who will be responsible for your home during the different phases of the process. This will let you know when you need to pay for insurance and you will not need to pay for insurance.

All modular homes should include a full warranty. Some building materials like your roof shingles will come with their product own warranty. The contract should state the full terms of the warranty. It should be clear what is covered, for how long it is covered and how repairs or replacement will be handled.

Building a new home is not simple. It requires several steps to happen in the right order. If your building permit or a zone variance is denied it will force your new home to stop before it ever started. If your financing falls apart you will be held responsible for paying without any money to pay for your modular home. Your contract should state at what point you can cancel the project and what cancellation fees you will need to pay.

These are some of the most common areas you need to pay attention to in your modular home contract. This is not a DIY moment. This is the time to visit a legal expert to review the contract with you. A lawyer will be able to make sure the contract is good for you and how to write out any changes that are needed. Be smart and do no rush this process. A misplaced comma could cost you thousands of dollars. A forgotten contact clause could cost your entire life savings.

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