After several meetings with different Building contractors / Civil contractors in order to build your dream House and going through several building construction Quotations, After which you Select the building contractor who you feel is the right person for building your House in Bangalore. The NEXT step is quite Critical and important in order to make sure that the project proceeds smoothly without completes without any delays or conflicts with the Civil contractors.
Many people miss the importance of having a well-documented agreement between the Owner and Contractor which is beneficial for both the parties including the Owner and Civil contractors. Below we have made points to consider while making the mutual agreement.
PONTS CONSIDERED WHILE DRAFTING THE AGREEMENT BETWEEN BUILDING CONTRACTOR AND OWNER
- Building Construction rates along with the detailed specifications.
- Cost of Basic Construction materials used like Steel, Cement, Sand, M Sand, Plastering Sand.
- Who will PAY/GET the Benefit if there is a change in Basic cost of Materials.
- Detailed Project Timelines along with dates.
- Who pays for the Architect Fees / House planning charges the construction phase.
- Payment time lines along with due dates.
- What will be the Owners Scope of work like BBMP BDA Plan Sanction, BWSSB, BESCOM etc.
- Delays in Payment made by Owner (important).
- Delays in Work done by the Building Contractors (important).
- Security/Ownership of Construction materials on site.
- The penalty for Delayed Work / Delayed payment.
- Mention of all Kinds of work carried out by the Contractor for the proposed House.
- Extra works along with Cost like Overhead tank, Compound wall, Parapet wall etc.
- Basic costs of finishing materials like Flooring, Painting, Wall tiles, Bath ware fittings.
- The contractor needs Approval for carrying Extra works on site.
- Settlement terms if Both parties want to discontinue work mutually.
- Owner holding of 3% on ever bill which will be given after 3 months after project completion.
- The responsibility of Building Contractor till 3 months after project completion for Civil problems.
- Final bill Settled to Civil contractor after measuring actual work done on site.
- All disputes to be mutually settled in presence of a Neutral Qualified site Engineer.
SAMPLE AGREEMENT BETWEEN OWNER AND BUILDING CONTRACTOR IN BANGALORE
NOTE : This is just a Draft agreement copy, where we have considered a sample project so that one can analyse with costs and payment terms.
THIS AGREEMENT IS MADE on _______________(Fill in the date) Between:
Mr. _______ _______ (OWNERS NAME)
#_________________(address of the Owner)
hereinafter called the OWNER, which term shall include his assigns and successors.
Mr. ______ ________ (BUILDING CONTRACTORS NAME)
#_________________(address of the Contractor)
hereinafter called the BUILDING CONTRACTOR, which term shall include his assigns and successors.
Whereas the owners possess a plot of land bearing #________ ______________ (address of the Site where construction will be carried out) and is desirous of constructing a house in the said plot of land as per the approved architects plan and the specifications, rates and quantities, enclosed and forming part of this agreement.
NOW THIS AGREEMENT IS AS FOLLOWS:
1. The Building Contractor shall in consideration of the money to be paid in the manner set forth below to execute and complete the works as per the plan and specifications enclosed to the satisfaction of the Owner and his Architect _______ _______ (Architects Name and Company details) having office address at #____ _____ ____ ___ (Address of the Architectural Firm).
2. This contract is square feet based contract. The cost per square feet of built area is Rs. 1750 (One thousand seven hundred and fifty only) (Fill with the Cost). The square feet shall include all built up area including balconies and utilities. Sit outs and passages shall be charged at Rs. 200 per sft.
The total area of the building is 4004 Sft (Fill Total Area ). Therefore, 4004X1750= Rs. 70,07,000 (Rupees Seventy lakhs seven thousand only)
The total area of entrance passage leading to entrance on the ground floor and the sit out on north side is 300 Sft. 300X200 = Rs. 60,000 (Rupees sixty thousand only).
The total cost of building = Rs. 70,67,000 (Rupees seventy lakhs sixty thousand only) (Fill the total cost of the Building) to carry out the work in respect of the entire construction of the said building as per the architectural and structural drawings and as per items mentioned in the schedule and signed on ________ (Fill in the date of signing). (Any additional work is chargeable as per the mentioned rates).
3. The term Architect shall mean Architect _______ _______ (Architects Name and Company details) having office address at #____ _____ ____ ___ (Address of the Architectural Firm) and or their representatives, appointed by the owner and in the event of his ceasing to be the Architect any one else nominated by the Owner and intimated to the Contractor in writing.
4. The rates quoted in the schedule shall be for complete work in all respects and shall include all direct, indirect and contingent costs, expenses including charges for scaffolding, centering material and shuttering, hire for tools and machinery, transportation charges and temporary sheds for storage of materials, labour removal of debris, etc.
5. COST ESCALATION CHARGES:
The rates in the schedule are based on the basic rates of steel and cement taken as Incase of any escalation in these basic rates corresponding downward or upward adjustments shall be made to the contracted amount/values. No escalation in respect of any other item or material or account shall be permitted.
6. The contractor hereby agrees to complete the work in all respects so as to make the house fully habitable on or before ____ ___ ___ (Mention project deadline date). It is an express stipulation that time is the essence of the contract. The work schedule shall be submitted by the contractor within 10 days from this date and weekly site meetings will be held to monitor the progress.
7. All works contract tax if applicable is included in the rates mentioned in Part 2 (Bill of Quantities) of this agreement. Any non-tendered items will be charged as per actual +15% profit
8. The Building contractor shall be responsible solely for the compliance, expense, liability, damages, etc., on account of the following matters, under the relevant laws, enactment’s and the owner shall not be liable for any such compliance, expense, liability and damages under any circumstances.
- a) Workman’s Compensation Act, Employees State Insurance Act, Provident Fund Act, Minimum Wages Act, and payment of Wages Act.
- b) Any other law relating to the workers employed in construction.
- c) Common Law in respect of injuries, etc., to person and property, caused due to and arising out of the carrying out the work under this contract.
- d) The Building contractor shall indemnify and keep indemnified the owner against all losses, damages, fines, prosecutions, liabilities that may arise or accrue against the owner from the contractor’s failure to adhere to all statutory obligations.
9. The Building contractor shall work in coordination with other agencies involved in working on the building. He shall render all co-operation and assistance to them. The time of completion shall not be extended on this account. The contractor shall set right damages caused to the building due to the work of electrical, sanitary and water supply, contractors, for which he shall be paid accordingly.
10. PAYMENT SCHEDULE
|A||Advance||10%||To start work|
|4||Door Frames /Electricle||7.50%||3.75%+5.375|
|7||External/Plastering||5%||prior to start|
Security retention amount will be 3% of the value of work executed and certified by Client/Client Representative. And released after 3month of the virtual completion of the project
11. If the OWNER chooses to supply any construction materials required they shall be given credit for the cost of such materials and the value shall be deducted out of the immediately succeeding running bill.
12. AUTHORIZED VARIATIONS:
a) The Building contractor may when authorized in writing or which directed verbally and later confirmed in writing by the architect with the previous consent of the owner and to or omit from or vary the work shown and described in the schedules and the contractor shall make no additions omissions, or variations without such authority or direction.
b) The Architect may with the consent of the owner omit from or add or vary any item of work shown and described in the schedule.
c) All authorized variations for which a rate or price may not have been previously agreed upon shall be measured and valued by the Architect. Items, for which no such rate exists shall be worked at actual cost to the contractor at site of work plus 15% VAT of the actual cost provided the architect duly certifies such cost.
13. MATERIALS AND WORKMANSHIP:
a) All materials and workmanship shall be the best of the respective kind and described in the schedules. The decision of the architect regarding the rates, quantity, and sufficiency of materials and workmanship will be final and binding on the contractor. Specific brands mentioned as per attached schedule.
b) The Architects shall have power to order removal from the works of any defective materials, or work to order substitutions of materials of work in accordance with this agreement and the schedules.
c) Not withstanding 12 (b) above the architect, may allow, in writing with prior written approval of the owner, such defective materials and / or work to remain with the consent of the owner and shall fix such lower rates or prices as they deem fit and these shall be binding on the contractor.
14. WATER AND POWER SUPPLY:
The owner shall arrange for temporary electrical connection, all electricity and water charges during the course of the construction will be borne by the client.
15. DEFECTS LIABILITY PERIOD:
Any defects, leakages, shrinkage or any other faults which may appear within three calendar months from the date of completion of the work, shall upon the direction in writing of the architect or owner and within such reasonable time as shall be specified therein be rectified and made good by the contractor at his own cost.
In case of default on the part of the contractor to rectify and make good the defects within the time specified by the Architect/Owner, the owner may employ and pay other persons to set right such defects and faults and the entire cost and expenses incurred thereon shall be borne by / made good by and/or be recoverable from the contractor, from any money including retention money due or which may become due to the civil contractor or otherwise.
16. If in the opinion of the architect the work carried out by the contractor is unsatisfactory, or the progress is slow or it is likely that the contractor would not be able to complete the work within the schedule, the owner shall have the right to terminate this agreement, at the contractor’s risk by giving 15 days when have the right to award the contract to such of the agencies as they may deem fit and any cash loss or expenses incurred on this account, as certified by the architect will be deducted from money due to or recovered from the contractor.
The Building contractor shall be responsible for the safety preservation and custody of all materials at site. He shall compensate and reimburse the owner for any loss, damages that may arise therefrom.
18. The Owner while retaining possession of the site has only permitted the contractor to enter upon the property for the purposes of constructing a residential house. The owner shall be subsequently entitled at any time to freely enter upon and exercise all acts of possession and ownership over the aforesaid residential site.
19. Mobilization advance of Rs 7,00,000.00 (Rupees Seven Lakhs only) (Fill the Advance amount given) is agreed upon by owner to be paid to contractor, vide cheque # __________, dated ______ (Fill Cheque no and Date) drawn on _______________ (Date of clearance), before the commencement of work.
20. Incase of any dispute or difference arises between the owner and the contractor, the decision of the architect shall be binding on both the parties.
IN WITNESS WHEREOF the parties hereto have set their hands on the date mentioned above at Bangalore.
Mr. _________ (OWNERS NAME) Mr. _______________(CONTRACTORS NAME)
. __________ _____________
TIPS FOR SIGNING AGREEMENT BETWEEN BUILDING CONTRACTOR AND OWNER IN BANGALORE
Before signing a construction agreement between Owner and Civil Contractor, One should ensure that all the items are covered properly so that there will be sufficient legal protection.
The risk factors should be included in the contract so that the interests of the House owner will be protected. If you fail to read the written agreement, you will not be in a defensive position. The delivery of products and services will be mentioned in the contract between the owner and the contractor.
If the Agreement is signed, it cannot be changed later unless it is agreed by both parties. One should be satisfied with the contract terms that is mutually benefits both parties (Owner and Civil contractors) . If you are not satisfied with the contract terms, you should be able to negotiate with the contractor.
DELIVERY TIME FRAME
A Civil contractor should deliver services within the stipulate time frame. The owner who is receiving goods and services should ensure that the delivery of service is in tune with the requirements. You can include various milestones and delivery points. If the delivery is not in tune with the milestone, you will be alerted.
MENTION VARIOUS PRICES LIKE BASIC COSTS OF MATERIALS USED IN CONSTRUCTION
The agreement should mention the cost factor of various construction materials used for building the House. If one fails to discuss additional charges, they should be discussed with the residential building contractor. If you go for a lum sum cost for that specific extra work done other than mentioned in the agreement. One should get an estimate if you are required to pay additional expenses.
MODE OF PAYMENT
There should not be any conflict on the mode of payment. The mode of payment can be through the cash, cheque or electronic fund transfer as per the mutual agreement. The law of the land should be honored so that there will not be any issues. You can clear payment at the end of the month. If you are unable to pay large bills at once, you can negotiate with the contractor so that the bill payment will take place in installments. Hence, there should be clarity on frequency of payments and volume of payments.
If you fail to pay as per the stipulated date mentioned in the agreement, you might want to pay the penalty. Similarly, the contractor is obliged to pay penalty in failing to complete the project within the stipulated time period. Even though there is increase in cost of various kinds of raw materials, the contractor should honor the contract and it should be delivered as per the schedule.
TERMS AND CONDITIONS
The terms and conditions that are agreed by both parties should be reflected in written form. The particulars should be included in the agreement.
INABILITY TO AGREE CLAUSE
If you would like to start the work immediately, you can go for an interim agreement. You should mention in the agreement that the interim agreement will be in force until a permanent agreement is signed between the owner and the contractor.
RESOLUTION OF DISPUTES between Contractor and Owner
Even though you include various kinds of issues and the solutions, you are prone to go through disputes. There will be arbitration clause which is binding by both parties. If the arbitration clause is mentioned in the agreement, the dispute should be settled amicably. You should understand the fact that arbitration is least expensive and the settlement will be done quickly. If you sign the agreement with the arbitration clause, you will not have any right to take the matter to the court.
COMPLETE DETAILS ABOUT THE CONSTRUCTION
The standard agreement between the owner and the contractor will include complete details about the construction. The construction should take place as the local building guidelines. The contract should contain drawings and specifications as approved by the competent authority. The details about the permission granted by the local government should also be mentioned in the agreement.
The building plans should be as per the local regulations and complete information should be provided to the owner. Various items such are structure of the building, electrical wiring, plumbing, drainage, septic tank, water cistern & guttering, access to road, landscaping and complete description should be provided in the agreement so that there will not be any ambiguity.
The information about the type of materials used for the construction should be included in the agreement.
The agreement should be prepared by experts and drafting standards should be maintained so that the interests of both parties will be protected. The date of signing the contract should be prominently displayed on the top of the page. The date of occupation of the site by the contractor should be furnished in the agreement.
VARIATION AND ALTERATION
If there are any alterations, they should be done as per the mutual agreement between the owner and the contractor. In most of the cases, there will not be any alterations. The alterations will be minor in nature. For example, the arrangement of cupboards, wiring and inclusion of additional power socket and other aspects can be discussed by the owner so that his or her interests will be served by the contractor. As long as the construction cost is within the price limit, there will not be any difficulty in making changes.
EXTENSION OF TIME IN CASE HOUSE CONSTRUCTION / COMPLETION IS DELAYED
If the contractor fails to complete the work within the stipulated period of time, the information should be provided to the owner immediately. The reason for extension of the time should be informed to the owner.
If the request made by the contractor is reasonable, the request will be processed by the owner. If the owner is not satisfied with the extension beyond reasonable period, the contractor is liable to pay damages.
Before handing over the building to the owner, the maintenance period should be mentioned in the contract. In most of the cases, the maintenance period will be from six months to one year.
The owner should be able to go through the work accomplished by the builder and demand changes as per his or her needs. The contractor is obliged to deliver the goods and products as per the contract. There should be communication between the owner and the contractor so that the project will be executed without any issues.