Residential construction contracts are contracts that, in addition to the basic content required of any contract, contains information related to the construction field. This is an area that requires a certain level of expertise to completely understand the information and terms outlined in contracts. It also helps you negotiate and reach agreements with the construction company more easily, and possibly seamlessly. Let’s follow what CNC has to say about Residential Construction Contract to learn more about what makes them special.

What does a residential construction contract?

A residential construction contract is a contract that contains details about the execution of residential construction projects for homeowners. Both parties (the contractor and the property owner) reach mutual agreements through a specific and detailed contract.

Once signed, both parties are legally bound to each other. The contracting and receiving parties must adhere to the terms agreed upon in the contract while fulfilling their respective rights and obligations.

What are the principles of signing a construction contract?

The parties involved in signing a contract will clearly agree in writing and authenticate as needed. Depending on various factors such as capacity, financial resources, and particular conditions, they will engage in negotiations and reach a consensus on each issue. Furthermore, both parties must ensure the following principles:

• Have sufficient capital to meet the agreement’s payment terms.
• Complete the selection of the contractor and negotiate the contract.
• If the contractor is part of a joint venture, there must be an accompanying joint venture agreement. Joint venture members will jointly sign and stamp the construction contract in the absence of any other agreement.
• All parties participate voluntarily, equally, and cooperatively, in compliance with the law and social ethics

What are the principles of signing a construction contract?

What should to consider when signing a construction contract?

Prior to signing a construction contract, you must have a thorough understanding of the following issues:

Agreement between both parties

The investor should only proceed to sign the contract once an agreement has been reached with the contractor regarding the price, method, and construction timeline. The contract value may vary depending on the area and the volume of additional work.

Construction schedule

The second issue vitally necessary to consider is the construction schedule. The contractor is required to clearly outline the entire construction schedule. Additionally, there must be a detailed schedule for each phase of the construction. Whenever a contractor does not meet the contract commitments, the contractor will be subject to contractual penalties as agreed upon by the parties in the contract.

Advance payment amount

Typically, the amount invested by the property owner is approximately twenty percent (20%) of the contract value. This amount ensures that the necessary materials, supplies, and design work for the contractor are prepared. The property owner must clarify additional costs that may arise during construction, including expenses for renting the land, electricity, water, building permits, and labor costs. One important note is to ensure that the agreed-upon contract value remains unchanged until completion of the contract.

Machinery and Equipment Used

In a construction contract, it is necessary to provide detailed specifics of all vehicles and machinery in use during the execution of contract. The contractor will be held responsible for the safety of the workforce by purchasing workers’ compensation insurance, while the investor will be responsible for project insurance (if any).

Construction contract

The construction contract is a template contract issued alongside legal documents, in which the parties are not allowed to unilaterally amend the contract’s content, and they are highly encouraged to carefully read the contract’s content to avoid disputes that may emerge later.

Design Drawings

Prior to signing the contract, the design drawings need to be thoroughly reviewed because these drawings have binding value in the construction contract. Simultaneously, both parties must establish mutual obligations and clarify the agreements within the contract

6 Things to keep in mind when signing a construction contract

Residential Construction Contract Form

Below, CNC Law Firm has provided a sample residential construction contract template as a reference:

THE SOCIALIST REPUBLIC OF VIETNAM

Independence – Freedom – Happiness

————-***———-

RESIDENTIAL CONSTRUCTION CONTRACT

Today, dated …./.…/.……

Address: …………………………………..………………………………………………………

We are

PARTY REQUESTS FOR IMPLEMENTATION OF RESIDENTIAL CONSTRUCTION (referred to as Party A)

Mr./Mrs.: ………………………………………………………………………………………….

ID Number :………………………..….Date of Issue…../..…/…… Place of Issue:…………

Address: …………………………………..………………………………………………………

Tel: ………………………………..……………………………………………………………….

PARTY IMPLEMENTATION OF RESIDENTIAL CONSTRUCTION (referred to as Party B)

Mr./Mrs./Company: ………………………………………………..……………………………..

Address: …………………………………..………………………………………………………

Tel: …………………………………..…………………………………………………………….

Professional certificates (or Business Registration Certificates if a Company)…………..

Date: ………………………. Place:………………………………………………………………

Both parties agree to this contract, in which Party A agrees to hire Party B to undertake the labor part for the construction of a residential building located at ……………………………………………………………………………. with the following terms:

Article 1: Scope of Work, Unit Price, Construction Schedule, Contract Value

Unit Price: Party A will pay a lump sum for labor to Party B based on the square meters (m2) of the constructed floor area. The unit price per m2 for completed construction is calculated as follows:

+ Main floor: ………………………………………..

+ Auxiliary floor: ……………………………………

The price above is for the complete construction work to be handed over, including: technical correction reinforcement of foundation steel, columns, floors, concrete filling, construction of staircases, foundations, walls, installation of doors, completion of underground water tanks, and septic tanks, interior and exterior plastering, cornice work, ceiling installation, balcony decoration, bathroom and kitchen wall cladding, flooring within the construction area, external waterproofing with cement, installation and completion of electrical and plumbing work, and painting as per technical requirements and design.

Other tasks (if any), such as bracing and safety measures for neighboring houses or soil removal during excavation, will be separately agreed upon outside the contract.

Preparation prior to construction: Party B is responsible for:

– Transporting materials within the project site. Party A is only responsible for transporting materials to the base of the construction site.

– Sieving sand, compacting and bending reinforcement bars

– Moistening bricks before laying, moistening walls post construction, and correctly applying concrete maintenance spray.

Party B must ensure the collaboration between electricians and plumbers to ensure proper technical installation and construction progress.

Construction Schedule:

– Commencement date: From …./.…/20….

– The time for completion and handover of the project, ensuring technical and aesthetic requirements, by …./…../ 20…, with a penalty of …………% of the contract value if delayed.

Contract value: The Contract value is determined as follows:

Payment per square meter of completion

Article 2: Responsibilities of the parties

Responsibilities of Party A

– Ensure the quality and appropriate quantity of supply materials, as well as provide electricity and water to the construction site, making interim payments and timely settlements.

– Provide technical drawings of the project

– Appoint individuals to directly supervise the construction progress, technical methods, quantity, and quality, distribute materials, and confirm new work for further construction.

– Act on behalf of Party B (as necessary) to address urgent requirements during the construction process.

– Suspend construction if technical requirements, labor safety, or material waste are not met.

Responsibilities of Party B

– Provide formwork for wooden or tile floor slabs, purlins, and support columns in accordance with technical requirements regarding timing and quantity (cost borne by Party B).

– Incessantly ensure that from … to … skilled workers and from … to … laborers are available for daily construction.

– Perform construction activities according to the design and specific requirements of Party A, ensuring quality, technical specifications, aesthetics of the project, and use materials efficiently and economically are met without compromise. Errors, damage, or waste, rework will be remedied without compensation for labor charges, and material must be reimbursed.

– Establish a construction schedule and safety measuresin agreement with Party A. Each construction item must undergo inspection and acceptance by Party A prior to proceeding with construction.

– Ensure absolute safety of people and the facilities during construction. In the event of an accident, Party B will bear full responsibility for the compensation of damages and injuries as stipulated under the law.

– Provide housekeeping an maintenance of the accommodations, living quarters, and monitor daily activities of the workers, as well as comply with regulations regarding order, security, and temporary residence declaration.

– Preserve all materials handed over by Party A including the construction equipment and machinery.

– For concrete filling, Party B must ensure that the concrete is compacted properly.

– Surfaces of walls and ceilings must be plastered smoothly, ensuring that no visible irregularities are present during inspection under electric lighting.

– Accept responsibility for guaranteeing the construction for a period of 6-months from the date Party A accepts it for use. Party B is responsible for rectifying any and all seepages in the walls, wall cracks, floor seepage, or concrete floor cracks, and Party A will not pay the warranty amount to Party B.

– The warranty amount for the construction is ……% of the total payment value.

Article 3: Payment

– Payments will be made in installments based on the completed work volume and acceptance as follows:

– Upon completion of the rough construction and roof casting, ……………… will be paid (payment for each floor);

– After the floor tiling and painting are finished, and upon handover to Party A, the payment will not exceed the completed work volume of ……………;

– When the construction is completed and put into use, Party A will be paid the remaining amount after deducting previously made payments, advances, and the construction warranty amount.

Article 4: Commitments

– Should any issues surface during the construction process, both parties must meet discuss a mutual agreement in order to ensure the quality of construction.

– During execution of the contract, if Party A finds that Party B does not meet the agreed-upon organizational capacity and technical skills, Party A has the right to suspend or terminate the contract. In which case, Party B will be paid ………….. based on the accepted volume of Any work that needs to be dismantled due unacceptable technical requirements will not be compensated, and Party B must compensate for damages.

– The contract is valid from the signing date until the contract is terminated. Both parties commit to faithfully following the terms of the contract. Any party violating the contract will be held responsible according to current legal regulations.

– The contract is provided in duplicate – in two (02) identical legal copies. Each party retains one copy for implementation.

 

REPRESENTATIVE OF PARTY A

REPRESENTATIVE OF PARTY B

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The essential information provided above pertains to residential construction contract templates provided by CNC. Please carefully study all the contract details to make informed decisions and avoid any unnecessary risks in the future. When in need of a consulting firm for residential construction contracts or have any related questions, please contact us.

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