CONSTRUCTION AGREEMENT

by | Mar 4, 2024 | Agreements

THIS AGREEMENT is hereby entered into on this XXXX, Two Thousand and Twenty-Three

BETWEEN

  1. XXXX, whose address is YYYY Hereinafter referred to as “Owner”

AND

  1. XXX, whose address is YYYY Suite XXXX , ZZZZ Hereinafter referred to as “Builder”

WHEREAS Owner owns a parcel of land located at XXXX Property Address (the “Property”), on which Owner desires to construct a multi-family home (the “Home”);

WHEREAS Builder is a licensed and qualified builder with experience in residential construction;

WHEREAS Owner desires to engage Builder to construct the Home on a cost-plus basis and to secure the performance of Builder’s obligations under this Agreement with a security interest in the Property; and

WHEREAS Builder is willing to construct the Home on a cost-plus basis and to provide the security interest requested by Owner

NOW, THEREFORE, the Parties agree as follows:

3.SCOPE OF WORK:

  1. a) Builder agrees to construct the Home in accordance with the plans and specifications agreed upon by the parties (the “Plans and Specifications”) and to perform all work necessary to complete the Home.
  2. b) Owner shall have the right to make changes to the Plans and Specifications, subject to the approval of Builder, which approval shall not be unreasonably withheld.
  3. c) Builder shall provide all labor, materials, tools, equipment, and services necessary to complete the Home, except for any items specifically identified in the Plans and Specifications as the responsibility of Owner.

4.COST PLUS BASIS:

  1. a) The construction of the Home shall be on a cost-plus basis.
  2. b) The “Costs” shall include all direct and indirect costs incurred by Builder in the construction of the Home, including, but not limited to, the cost of all labor, materials, c) Tools, equipment, and services, the cost of all permits and inspections, and the cost of all insurance required for the Home.
  3. d) The “Fee” shall be an amount equal to five percent (5%) of the Costs.
  4. e) Builder shall provide Owner with a detailed accounting of all Costs incurred and the Fee charged on a monthly basis.
  5. PAYMENT:
  6. a) Owner shall pay Builder the Costs incurred by Builder, plus the Fee, within ninety (90) days of receipt of Builder’s invoice.
  7. b) Owner shall pay Builder a deposit of two thousand, five hundred dollars ($2500) prior to the commencement of construction.
  8. c) The Owner shall pay the Builder a monthly administrative fee of $2,000.00 until the final invoice is issued.
  9. d) Owner shall have the right to inspect all invoices, receipts, and other documentation relating to the Costs incurred by Builder.
  10. e) Owner shall provide Builder with a Promissory Note secured by the Property. The Promissory Note shall be in the amount of the remaining Project cost, payable to Builder upon completion of the Project.
  11. LIEN RELEASES AND INSURANCE

The Builder shall ensure that during the building process that the Builder secures releases of liens from all sub-contractors or third-parties. The Builder shall also ensure that all sub-contractors have liability insurance and indemnify the Owner.

  1. SECURITY INTEREST:
  2. a) In consideration for Builder’s agreement to construct the Home on a cost-plus basis, Owner agrees to grant Builder a security interest in the Property.
  3. b) Owner shall execute and deliver to Builder a security agreement and financing statement in a form acceptable to Builder, granting Builder a security interest in the Property.
  4. c) Owner shall take all necessary steps to perfect and maintain Builder’s security interest in the Property, including, but not limited to, filing all necessary financing statements and paying all filing fees.
  5. CHANGE ORDERS:
  6. a) Any changes to the Project shall be made by written Change Order signed by both Owner and Builder.
  7. b) The Change Order shall detail the nature of the change, any adjustments to the Project cost, and any adjustments to the completion date.

9.WARRANTY:

  1. a) Builder warrants that the Home will be constructed in a good and workmanlike manner and in accordance with the Plans and Specifications.
  2. b) Builder further warrants that all materials and equipment used in the construction of the Home will be new, unless otherwise specified in the Plans and Specifications.
  3. c) The warranties set forth in this Section 5 shall survive the completion of the construction of the Home and shall continue for a period of [Warranty Period] after the date of substantial completion.

10.DISPUTE RESOLUTION:

  1. a) Any disputes arising out of or related to this Agreement or the performance thereof shall be settled through binding arbitration in accordance with the rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The arbitration shall take place in Texas, and shall be conducted by a single arbitrator mutually agreed upon by the parties. Each party shall bear its own costs associated with the arbitration, including its attorneys’ fees and expenses, and shall share equally the fees and expenses of the arbitrator.
  2. b) Notwithstanding the foregoing, either party may seek interim or preliminary relief from a court of competent jurisdiction to protect its rights or property, pending the completion of arbitration.
  3. c) The parties agree to maintain the confidentiality of the arbitration proceedings, the hearing, and the award, except as may be necessary to prepare for or conduct the arbitration hearing on the merits, or except as may be necessary in connection with a court application for a preliminary or interim remedy, or confirmation of an award, or unless otherwise required by law.
  4. d) This dispute resolution provision shall survive the termination of this Agreement.
  5. INSURANCE:

During the construction of the Home, Builder shall maintain liability insurance and property damage insurance covering the work performed on the Property.

  1. INDEMNIFICATION:

Builder agrees to indemnify and hold Owner harmless from any and all claims, damages, and expenses arising out of the construction of the Home, including but not limited to any claims arising out of bodily injury or property damage caused by Builder’s negligence.

  1. TERMINATION:

Either party may terminate this Agreement at any time for any reason upon written notice to the other party. In the event of termination, Owner agrees to pay Builder for all work completed up to the date of termination.

  1. GOVERNING LAW:

This Agreement shall be governed by and construed in accordance with the laws of the State of XXXX

  1. ENTIRE AGREEMENT:

This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the construction of the Home.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written.

SIGNED by the parties:                                               )

……………………………                                                      ) _________________

XXXXX                   ) Signature

)                                                                                                                                     )

AND

……………………………

XXXX

YYYY                                  ) _________________

) Signature

)

)

 

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