Home improvement can be a complicated business, especially if you are getting extensive remodeling or major plumbing or electrical work done. Writing a clear, comprehensive contract with your contractor is vital to simplify the process and ensure that your “handshake” agreements are carried out. You'll find home improvement contracts online to download and print, or the contractor you hire may have a standard form.

If you prefer, you can write your own. However, we recommend that you do your research first by reading through a contract template issued by your state government, which usually includes relevant information regarding consumer rights, such as a permissible contract cancellation period. Be sure that all the essentials are covered, every blank space on the contract is completed, and both parties sign before the physical work begins. Here’s a guide to what a good contract should include:

1. Homeowner identification. Fill in your name, home address, email, and contact telephone number(s).
   
   
2. Contractor identification. Write the contractor company name as it appears on the business license, the name of the salesperson or owner you're dealing with, company business address and phone, email, contractor’s social security number, and license or registration number with its expiration date. The contractor’s business liability insurance, workers’ compensation coverage, and bonding information may also be included here.
   
   
3. Description of the work. This section should describe in detail the work which you are contracting to have performed. Include all labor, equipment, and materials that the contractor is to supply, specifying the brand, model, price, and number or quantity of units (for example, 6 electrical boxes or 1000 square feet of tile). You might wish to attach your building plans as an appendix.
   
   
4. Building permits and inspections. Specify which documents and procedures are required and who will be responsible for arranging them. Requirements vary according to where you live, so be sure to do your due diligence.
   
   
5. Project dates. Record the projected start and finish dates for the job.
   
   
6. Total cost. Indicate whether this figure does or does not include materials.
   
   
7. Payment schedule. Generally, local law spells out a maximum percentage of the project cost payable upfront as a deposit -- usually 10 to 33 percent. (If you have requested special order items, though, you might be required to pay their full cost in advance.) Further payments can be scheduled by either a specific date or a project milestone. You may want to include monetary penalties for substantial delays.
   
   
8. Financing terms and conditions. Recently, some contractors have started offering consumer financing for large-scale home improvement projects. Make sure that your local law permits this type of loan before you opt in (New York City, for instance, forbids it). Get the terms and conditions formalized in writing.
   
   
9. Contractor’s warranty. The warranty periods for materials and labor should be stated together with a description of what, precisely, is covered by the warranty.
   
   
10. Arbitration provision. This details what type of procedure is to be followed in case of a dispute between the homeowner and the contractor, such as informal negotiation, mediation, binding arbitration, or litigation. Some states grant homeowners the legal right to demand arbitration to settle a dispute with their contractor.
    
    
11. Signature. Both the homeowner(s) and contractor must sign the agreement, indicating the date that each party signed.

DISCLAIMER: This article is for general informational purposes only and should not be construed as legal advice. If you have any questions about the wording or validity of a contract, please consult a qualified attorney.

Laura Firszt writes for networx.com.