Contractors Agreement

Real Estate Investing
1

I am looking for a good contractors agreement and would really appreciate any rehabbers that would be willing to share with me the contract they use. I live in CA.

I know which provisions I want included for the most part but am afraid of writing my own contract for the fear of not wording correctly or not using the correct legal language. Here are a few of the provisions I would want in the contract:

-Paragraph stating they are not my employee and I will not be responsible for their taxes or providing benefits.
-Confidentiality
-No Assignment of work with out written consent
-Final Payment upon completion of satisfactory work as well as permit approval.
-Conditions that allow for contract termination.
-Penalty Clause for late completion.
-Insurance requirements.
-Signing of lien waivers upon final and progress payments.

Im sure there are many more that need to be included but again afraid to write my own contract and afraid of some of the free ones on the net that might have a lot of holes in them. Would appreciate and advice of finding a good one or if someone would be willing to share.

Off topic, also would appreciate if anyone would recommend methods of buying materials for projects with contractors. Im a little skeptical of including materials in contractor estimates and allowing them to purchase themselves because of the possibility of them including extra materials for them to use on other projects with me paying for them. Any suggestions?

Hope im not asking to much but thanks anyhow.

2

If you google search you will find some templates that you can modify and use.

I supply my own materials, not because I am afraid of misuse, but because I want to buy them as cheap as possible and be certain I get everything I want for a house.

Jim

3

I agree with Jim. Buy your own materials and deliver to the jobsite. Don’t get too far ahead, or they might disappear.

This will also eliminate the need for you to pay the contractor any up front money. Many of them will tell you they need upfront money for material.

I don’t have a contract to share, but my main advice is to verify licensing and insurance, and don’t give ANY money upfront.

–Natalie

4

I understood that it’s not a good idea to buy your own materials because the IRS will view your relationship status with your independent contractor as an employer/employee relationship not as independent contractor relationship anymore in which case you could be held to the same standard as any employer would be. This is what I’ve heard. You might want to confirm this with your lawyer or cpa if you have one. Or maybe someone else can chime in on this.

5

Title-Escrow option

I’ve seen investors nation-wide get suitable forms from their local Title-Escrows and they’ll frequently complete them as needed, and for a lot less than any lawyer would charge.

6

Try this link and see if you can find what you need.

http://www.constructionweblinks.com/Industry_Topics/Legal_and_Contracts/Standard_Forms_and_Contracts__/California_Statutory_Lien_Rele/california_statutory_lien_rele.html

7

thanks for your responses. i would definitely prefer to buy the materials and have them delivered myself but as newbie mentioned, i have also heard thats one of the criteria to determine a relationship as employer-employee. I feel like that one reason wouldnt be enough to enforce that relationship but im not certain myself. anyone else know how strict IRS is on these matters?

8

Employee vs. Ind Contractor issue

Lots of court decisions in lawbooks on how the issue of employee (E’ee) or independent contractor (IC) was determined by those courts.

Generally speaking the big over-riding issue is how much did owner control the workman and in those situations where O control was really heavily present the courts ruled workman was E’ee and not IC.

I remember a death case where our client’s deceased Husband was hired to drive a truck and the written employment agreement the driver was required to sign was so heavily laced with control by truck co that clearly truck co was hiring an E’ee and that Eee was covered by truck co’s Workers Comp.

A lawyer I knew, a very smart guy and law school class-mate of mine, wrote the truck drivers’ agreement and it always puzzled me that he wrote in so much control when he & I always knew that was big criteria for determining whether workman was Eee or IC.

9

Thanks John,

So you think i will be fine buying my own materials as long as i dont tell contractor when or how to work even if the contract was analyzed in a court case?

10

Protective Ind. Cntr agreement

Any written agreement should specify that he’s doing work as ind. contr and not your employee, and that agreement should spell out that when & how he does it, and tools he uses are at his sole discretion.