Here's how to sort the difference between home improvement or home renovation contracts, guarantees, warranties and service contracts.
Alt=home improvement projectWritten contracts are the absolute bare minimum required for all home improvement projects. The written contract is the tool that spells out everyone's expectations and responsibilities for the project. Most home improvement problems do not arise from crooked contractors. Many erupt because the homeowner and contractor have different expectations for the home improvement project.
Project guarantees, relatively new on the home improvement scene, are a response to the public's concerns about the reliability of remodeling professionals. Several home improvement retailers and on-line home improvement services, as well as a few independent remodelers offer them.
Manufacturers' warranties are also standard for products used in home improvements, and are the assurance from manufacturers that their products will work as intended under the circumstances prescribed for use. Service contracts, sometimes called extended warranties, provide additional protection when taking on a home improvement project, but are not included in the selling price of the product.
A contract is a document clearly stating the expectations and responsibilities of each party involved in a home improvement project. It protects each party's rights, reflects a trust between the parties, and should demonstrate a thorough understanding of the budget, project details, and what the homeowner hopes to accomplish through the home improvement work being done.
A standard home improvement project contract includes sections that describe:
- the scope of home improvement work, materials and equipment
- the work and payment schedules
- confirmation of the contractor's ability to provide proof of all required insurance
- confirmation that all written warranties on materials and products will be delivered to the homeowner
Related documents like change orders and punch lists are just as important as the initial home improvement contract. A change order is a notice describing a change to the home improvement project contract. Change orders are typical in home remodeling, either to make a change in product selection, or if the scope of the job has changed due to an unforeseen circumstance. Change orders need to include a description of the home improvement task to be performed as well as the resulting labor and materials costs. If the home improvement project completion date is impacted by the change order, it should also list the newly agreed to home improvement completion date.
While some independent contractors are now offering guarantees, they are more common from home improvement retailers, such as Home Depot and Lowe's. Guarantees add an extra layer of assurance for homeowners who are concerned about becoming another home improvement horror story statistic.
Extended warranties, also known as service contracts, may also be offered for an additional cost. The FTC recommends the following to determine whether you need a service contract:
- Whether the warranty already covers the repairs and the time period of coverage that you would get under the service contract
- Whether the product is likely to need repairs and the potential costs of such repairs;
- The duration of the service contract
- The reputation of the company offering the service contract
Also keep in mind that some credit card companies, like American Express, will double the manufacturer's warranty on purchases made with their card. These programs have limitations too, but they are free and can lessen the need to pay for extended coverage.
Bottom line: homeowners are not powerless when it comes to assuring a positive home improvement experience. Don't work with any contractor who balks at a signed contract.
Consider the advantages of project guarantees and save your product warranty information to make sure your dream home improvement project doesn't become a nightmare.