Commercial Construction Contract

woman signing construction contract with contractor to build a house

If you’re diving into commercial real estate, you’re probably excited about the prospects of a finished project. However, the plans might go south if you enter into a poorly drafted commercial construction contract that results in construction disputes. A report by KPMG shows that two-thirds of project owners blame contractors for underperforming projects. In this blog, you’ll learn more about commercial construction contracts and how to prepare before signing a contract. 

What is a Commercial Construction Contract?

A commercial construction contract is a legally binding document that outlines each party’s obligations concerning the project, who receives monetary compensation, and when the construction will be regarded as complete. But that’s not all. A commercial construction contract outlines how compensation will be divided.

What Does a Commercial Construction Contract Contain?

Like any business contract, commercial construction contracts contain certain basic elements that make them legally enforceable. Here are some fundamental tenets that can’t miss in a construction contract.

  1. The expected project duration
  2. The total value of fiscal compensation on project completion
  3. The scope and schedule of a project
  4. A clause in resolving project delays

While you may already know the basic tenets of a construction contract, Bucks County real estate lawyers can help you ensure the agreement captures all your project specifications. Remember that once the contract is in place and work commences, it might be challenging to amend. So, it’s best to get it right the first time around.

What Types of Construction Contracts Can I Choose From?

There are many construction contracts you can choose from as an investor in Pennsylvania commercial real estate. Your real estate attorney will help you pick a contract that matches your current needs. Here’re the most common types of construction contracts.

  1. Lump Sum Contract: You pay a preset price, and the contractor delivers according to that price
  2. Cost Plus Contract: You pay contractors for all construction expenses plus a pre-determined profit margin
  3. Time and Materials Contract: You’ll pay an agreed price determined by total time spent, materials, and a profit margin
  4. Unit Price Contracts: You’ll pay on a per-unit basis depending on the rate agreed

Deciding which type of contract to pick and what it should cover isn’t a cakewalk. That’s why Olen Law Office brings together experienced real estate lawyers to ensure you get a comprehensive construction contract that protects your interests. Contact us today to consult for an excellent construction contract from experts in Pennsylvania.