What to Look for in a Construction Agreement?

Building your dream home is one of the biggest investments of your life — both financially and emotionally.
Before the first brick is laid, there’s one document that protects you from misunderstandings and future disputes:
👉 The Construction Agreement.

A well-written construction agreement clearly defines scope, cost, materials, timeline, and responsibilities between you and the builder.
Let’s break down what every homeowner should look for before signing one.

🏠 1. Project Details and Scope of Work

The agreement should clearly describe what’s being built — and to what extent.

🔹 Include:

• Site address and plot size (e.g., 30×40, 2400 sq.ft.)

• Total built-up area (e.g., G+1, 2000 sq.ft.)

• Type of construction (residential, duplex, villa, etc.)

• Number of bedrooms, bathrooms, and additional structures (compound wall, sump, borewell, etc.)

✅ Why It Matters:

This ensures that both parties have the same understanding of the project. Ambiguity here can lead to disputes later.

🧱 2. Detailed Specifications of Materials

Avoid vague terms like “good quality materials.”
Ask for a detailed list of brands and grades to be used for each component.

🧩 Example:

✅ Why It Matters:

A proper specification sheet ensures transparency and quality control — preventing cheap material substitution.

🧮 3. Project Cost and Payment Schedule

The agreement should mention the total agreed cost (e.g., ₹2,000 per sq.ft. or a total lump sum).
Break it into stage-wise payments linked to work progress.

📊 Example Payment Stages:

1. Foundation – 10%

2. Roof slab – 25%

3. Brickwork & plastering – 25%

4. Flooring & painting – 25%

5. Finishing & handover – 15%

✅ Why It Matters:

You pay only after completion of each milestone, ensuring accountability and steady cash flow.

⏰ 4. Construction Timeline and Completion Date

Your agreement should include:

• Project start date

• Expected completion date

• Delay penalty clause

💡 Example:

“For every week of delay beyond the agreed completion date (not due to force majeure), the contractor shall pay ₹___ per day as penalty.”

✅ Why It Matters:

This helps keep your builder committed to deadlines.

🔄 5. Change Order (Variation) Clause

Design or material changes are common during construction — but they should be documented and approved in writing.

🔹 Include:

• How change requests are made (written/email)

• How cost and time impact are calculated

✅ Why It Matters:

Prevents disputes when additional work or upgrades are requested later.

🧾 6. Warranty & Defect Liability Period

A good builder provides a defect liability period (DLP) — a warranty covering issues after handover.

Typical Coverage:

• Structural defects (1–5 years)

• Plumbing and electrical issues (6–12 months)

• Leakage or cracks (as applicable)

✅ Why It Matters:

Assures peace of mind after project completion — builder is responsible for repair if issues arise during this period.

⚖️ 7. Dispute Resolution & Legal Jurisdiction

No matter how good the relationship, misunderstandings can occur.
The contract should define how disputes will be resolved.

🔹 Mention:

• Step 1: Mutual discussion

• Step 2: Mediation / Arbitration

• Step 3: Legal proceedings (mention city jurisdiction)

✅ Why It Matters:

Saves time and money if any issue reaches a legal stage.

🧍‍♂️ 8. Insurance, Safety, and Liability

Ensure the builder takes responsibility for:

• Worker safety and labour insurance

• Site accidents or property damage during construction

• Local authority compliance (labour laws, safety norms)

✅ Why It Matters:

Prevents you from being held legally liable for on-site incidents.

📋 9. Documents to Attach with the Agreement

Attach supporting documents for complete clarity:

• Approved floor plan

• Material specification sheet

• Project schedule

• BOQ (Bill of Quantities)

• Payment milestone chart

• Copies of builder’s license, GST, or RERA registration

💡 10. Final Checklist Before Signing

✅ Read every clause carefully — don’t rush.
✅ Get clarifications in writing, not verbally.
✅ Keep signed copies with both parties.
✅ Involve a civil engineer or legal advisor to review the document.

🧠 Final Thoughts

A transparent and detailed construction agreement is not just paperwork — it’s your protection shield.
It ensures clarity, fairness, and trust between you and your builder.

Remember: “Good buildings are built on strong foundations — and strong agreements.”