Understand Custom Home Contracts in Arizona to Avoid Post Move-In Issues

It is easy to get excited about building a custom home.  For most people, it is a long-term goal to build their dream home.  There are so many interesting choices and decisions to make as you start to plan out exactly what your custom home will include.  For example, you’ll be designing the layout and choosing every detail of the home.  As you run through all the possibilities for your home, you might be tempted to get the contract signed and get started as soon as you can.  Keep in mind that it is vital to thoroughly review all details of the contract and completely understand what needs to be included in a custom home contract in Arizona to avoid post move-in issues.

Importance of Custom Home Contracts in Arizona

Many contractors and custom home builders will leave the custom home contract as the last step before getting started.  They will generally work with you to get the details planned out and deliver some potential quotes before you are provided with a contract.  This is typical of the process, but it is also tempting to get so excited about the home that you are simply ready to sign whatever contract is put in front of you.  If you want to make sure that the custom home contract protects your best interests and ensures that the home builder will deliver on their promises, you will want to make sure that you have an experienced real estate attorney review the contract before signing.

Most Important Parts of a Custom Home Contract in Arizona

One of the most important reasons to work with an experienced Arizona real estate attorney to craft or review your custom home contract is to understand the most common issues that other people have encountered.  Any custom home contract in Arizona should clearly define the proposed scope of work, timeframe for completion of work, warranty on work, payment schedule and terms, how changes in the scope of work are handled and billed, and the process for dispute resolution.

The section for scope of work should be the most detailed.  It will need to include all the proposed work to be completed, all permits to obtained, equipment to be used, materials required for the job, and how the labor will be managed and potentially sub-contracted.  Nothing in this section should be left to a verbal agreement.  Any work that you expect or agreed to have finished should be included in the contract.  You also want to take special care to match up all details of the plans for the home with the contract.  Our firm can assist in this complicated process of ensuring that the home plans and specs are exactly matched to the custom home contract.  The contract should also include a clause that details all work must be completed up to local building codes and meet all applicable Arizona laws.  This additional clause will be important if there are any disputes about the quality of the work and finished product.

Custom home builds can be delayed for many valid reasons, but you want to include details about the specific timelines for all completed work.  Timing and proposed deadlines for the various phases of the custom home contract should be included in your Arizona custom home contract.  You want to include when the build will start, how long each part of the project is expected to take, and when you will be able to move into your completed home.  Generally, a custom home builder will insist on some flexibility for unavoidable delays and there may even be a “no damage for delay” provision in the contract, effectively barring compensable damages.  These should always be reviewed by an experienced real estate attorney to make sure these are valid reasons for possible delays, and if there are not, that they will be compensable.

When there is a delay, an experienced real estate attorney will be capable of assessing the circumstances and distinguishing between excusable delays (those outside of the control of the contractor, which may or may not be compensable under the circumstances) and non-excusable delays (those attributed directly to the contractor, for which the contractor will get neither additional time nor money).

A custom home contract will generally require a specific timeline for payments to the home builder.  Specifically, Arizona enacted a private sector prompt payment law in 2000, which dictates the circumstances by which payments must be made.  These laws set certain presumptive periods and conditions, which can only be opted out of through the use of “clear and conspicuous” language of such other time periods in the contract and “EXCEPTION” language appearing in clear and conspicuous type on each of the construction plans.  Navigating through these laws can sometimes feel like navigating through a mine field.  For example, if a written objection to a monthly pay application is not made by the owner of the home within a presumptive period of time, it may be deemed approved.  Having an experienced real estate attorney sit down and explain these laws prior to engaging in a custom home contract can prove to be invaluable.

To obtain all the necessary materials, permits, and labor for the home, there will generally be a sizable upfront payment to start the construction and planned invoices as the project progresses.  Obviously, you need to make sure you are prepared for all required payments.  You should also structure the contract to include as few surprises as possible.  This means that unexpected expenses for the home builder should be cleared and detailed as early as possible and you should agree on an acceptable amount of time for those expenses to be paid.

You want to make sure your custom home contract includes warranty details.  This should include how long the warranty lasts, what the contractor or builder will fix, what maintenance requirements you have as the homeowner, and the process for getting necessary repairs completed.  You want to make sure the contract does not include any waivers of warranties or sections that specifically limit the warranty in ways that are not expressed clearly.

One of the final important sections to consider in any custom home contract is dispute resolution.  Every custom home build has the potential for a dispute with the builder or contractor.  Our firm can help you consider your options here.  It is generally best to not waive your right to a trial, but arbitration will typically be a more cost-effective and quicker way to resolve any disputes.

Additional Tips for Custom Home Contracts in Arizona

Building your custom home should be a rewarding time for any family.  You just want to make sure you take the time to structure the contract correctly before moving forward.  You should always confirm that the contractor has all the appropriate licenses and insurance to cover the project.  It’s never a bad idea to check their reviews and references online as well.  There are many great websites to see what other clients say about their work.  And before you sign any contracts, make sure you have an experienced real estate attorney in Arizona review the agreement.  This will save you from many potential headaches, added expenses, and unnecessary legal disputes.

MacQueen & Gottlieb have significant experience with custom home contracts in Arizona.  Our firm can help you draft, negotiate and structure the contract to protect your rights and give your custom home the best chance of being completed on-time and on-budget.  Contact us today at 602-533-2840 to schedule an initial consultation or make an appointment online.