Planning, Contracts, and Permits

An allowance is a budget placeholder for an item you have not selected yet, like tile or fixtures.

Arbitration is a method of resolving contract disputes outside of court, where a neutral third party (the arbitrator) makes a binding decision.

As-built documents show what was actually installed and where, after changes during construction.

Broom clean is a contract standard meaning the builder will remove all debris, sweep the floors, and leave the property relatively tidy at turnover.

Builder's Risk Insurance is a specialized property insurance that covers the home and materials during construction against damage like fire, wind, or theft.

A certificate of insurance is a document that shows the builder has active insurance, usually general liability and workers comp.

A Certificate of Occupancy is an official document issued by the local government verifying that a building complies with building codes and is safe to live in.

A change order is a written agreement that changes the scope, cost, or schedule after work starts.

Change order markup is the percentage the builder adds to cover overhead and profit on change work.

Contingency is extra money and time set aside for unknowns, especially in remodels.

A cost-plus contract is an agreement where the homeowner pays the actual cost of materials and labor, plus a fixed percentage or fee for the builder's overhead and profit.

A data plate is the label on equipment that shows model number, serial number, manufacture date, and specifications.

A draw schedule is the plan for when payments happen, usually tied to milestones.

An easement is a legal right that allows someone other than the property owner to use a specific portion of the property.

An escalation clause is a contract provision that allows the builder to increase the price if the cost of materials (like lumber or copper) spikes unexpectedly during construction.

Exclusions are items and tasks the contract says the builder will not provide.

An excusable delay is a delay caused by events outside the builder's control, giving them an extension of time without penalty.

A final walkthrough is an inspection near the end of a project to identify punch list items before you accept the work as complete.

A fixed-price (or stipulated sum) contract is an agreement where the builder agrees to complete the project for a single, guaranteed total price.

Force majeure is a contract clause that excuses a party from fulfilling their obligations due to an extraordinary, unforeseeable event beyond their control (an 'Act of God').

General conditions are the indirect 'soft costs' of a construction project, such as portable toilets, dumpsters, site supervision, temporary power, and cleanup.

A GMP is a contract structure that sets a maximum price, with rules for what happens if costs go above or below.

Inclusions are items and tasks the contract says the builder will provide.

Indemnification is a contract clause where one party agrees to financially protect (or 'hold harmless') the other party against specific third-party claims or lawsuits.

An inspection is a checkpoint where an inspector verifies work meets code before it gets covered up.

A lien waiver is a document that says a contractor or supplier has been paid and will not file a lien for that payment.

Liquidated damages are a pre-agreed daily or weekly financial penalty the builder pays if the project is delayed past the contracted completion date.

A mechanic's lien is a legal claim placed on your property by a contractor, subcontractor, or supplier who hasn't been paid for their work or materials.

A milestone draw is a scheduled payment made to the builder when a specific, verifiable stage of construction is completed.

A notice to proceed is a formal written authorization from the owner telling the builder to start work.

A packaging or installation certificate is the document included with an appliance that records the installation date and is needed to activate the warranty.

A permit is official approval to do certain work, usually tied to safety rules and inspections.

A pre-drywall walkthrough is a scheduled visit to inspect framing, wiring, plumbing, and insulation before drywall covers everything up.

A punch list is a final list of small fixes and finish details before you call the job complete.

Retainage is money held back from each payment until the end of the job.

An RFI is a formal question used to clarify plans and details before work continues.

A right to cure clause gives the builder a specific amount of time to fix defective work or a breach of contract before you can terminate them or hire someone else.

A schedule of values is a list that breaks the contract price into line items like framing, plumbing, electrical, and finishes.

Scope of work is the written list of what the builder will do and what the builder will deliver.

Substantial completion is the point when the home is usable for its intended purpose, even if small items remain.

A turnkey contract means the builder is responsible for delivering a completely finished home, ready to use—you just 'turn the key' and walk in.

A warranty is the builder’s promise to fix certain issues for a set time after completion.