When Massachusetts property owners or businesses hire a company for improvement projects and construction work, they will receive a contract. Residential owners and small business owners should be aware of critical details regarding the contract.

Most sign the contract under the expectation that they are protected if issues arise. However, many might not fully understand what the contract entails and their rights if there is a construction dispute.

Civil litigation for a disagreement with a construction company, a contractor or subcontractor can be complicated, and it is wise to understand the basics. For projects that cost less than $1,000, it is not legally required to have a contract.

A typical financial problem that comes up in a construction project is if the contractor finds extra work that supposedly needs to be done, and that impacts the price. The contract should state how much the work – as requested – will cost. If more work is done and the owner agrees, that should be added to the contract.

A payment agreement and the date of payments with potential finance charges and terms should be included. The deposit will be paid before work begins. It cannot go beyond one-third of the total cost of the project or actual cost of equipment, material or items that are made or ordered specially for its completion. If there are items that need to be ordered, there should be sufficient notice that the project will be completed based on the agreed-upon date.

There could be a security interest or lien on the property as part of the contract. The owner or proprietor must understand the consequences of this. The contract cannot have a clause requiring the balance to be paid before its due date. For small businesses, such financial outlays and bills could make a significant difference in the bottom line and even staying in business. The owner must receive a copy of the contract before work commences.

Construction disputes and civil litigation to settle the matter are common. Often, people who have an agreement will be surprised to discover the contract limits their rights. It may be necessary to negotiate, consider arbitration or to take the matter to court.