Custom Home Builder Contract: What Should Be Included?

A firm price and how it can change, an itemized specification of every included and excluded item, a draw schedule tied to construction progress, written change order terms, lien waiver handling, warranty terms, and a completion timeline. Anything agreed verbally and left out of these documents does not exist.

The short version

• The specification matters more than the contract’s legal language.
• A progress based draw schedule protects you more than any clause.
• Change order terms should be settled before you need them.
• Lien waivers keep a subcontractor from claiming against your house.
• Read the exclusions list twice. It is where disputes originate.

What are the essential parts of a home building contract?

Seven, and none are optional on a project this size.

Anasazi’s package is the contract plus a ten page specifics document, initialed page by page.

"There’s no confusion," John Worlund says. "It’s all there in the ten pages of specifics."

Why does the specification matter more than the contract language?

Because almost every dispute is about scope rather than law. When something is missing from the finished house and the homeowner expected it, the argument is over what was agreed, and a document that itemizes both inclusions and exclusions settles that in plain English rather than in a lawyer’s office.

Read the exclusions closely. Landscaping, landscape grading, fencing and window coverings are typically outside the bid unless specifically priced. Appliances usually run as an allowance. The driveway should be described, since a short subdivision approach and a long rural run are entirely different jobs.

Final grading around the house is included at Anasazi. Landscape grading is not. That level of specificity is what you want throughout.

What should the payment schedule look like?

Tied to completed work rather than to the calendar. Anasazi’s out of pocket schedule runs 10 percent to start, then 20 percent each at concrete, framing, drywall and after trim and painting, with the final 10 percent at Certificate of Occupancy. Large front loaded draws are the structure that lets a bad actor take money and leave.

"We do not take fifty percent draws," John says. "We try to make it very based upon the work progress. It allows the homeowner and the builder to know when the next draw point is."

On a bank financed build the cycle differs. Every 30 days the builder submits completed line items, you review and initial them, the bank sends an inspector to verify, and payment releases once verification returns, usually within three to four days.

Lien waivers attach to this. Your bank requires them on anything over $5,000, and they prevent a trade from placing a lien on your home over a payment dispute you were never party to.

How should the contract handle changes?

In writing, priced, and signed before any work starts. At Anasazi a change becomes a separate contract with its own fixed price, quoted to you first, then submitted to the bank and normally paid through the regular 30 day draw. The original contract number stays where it is.

Ask for the schedule impact alongside the price, because they are two different answers. Exterior work often runs parallel to the house with no delay. Interior changes are more likely to move the completion date.

Verbal change agreements are how billing disputes start. If a builder is comfortable handling changes on a handshake, that tells you how he will handle the disagreement later.

What about timeline and warranty clauses?

The contract should state a completion expectation, and you should ask what happens if it slips. Anasazi has never needed a timeline penalty clause, which John attributes to always having finished ahead of the quoted date, but the question is still worth asking of any builder.

For warranty, confirm three things: the base term, the follow up schedule for non emergency items, and the process for genuine emergencies. Washington requires a one year base warranty on new construction. Anasazi honors that, operates on a six month follow up schedule for smaller items, and provides direct subcontractor contact numbers at delivery so emergencies do not route through the builder first.

Extended warranties of two to five years are available separately through third party programs.

The contract is where a good conversation becomes an enforceable agreement, and the specification is where the real detail lives. Ask to see how Anasazi structures both, or read the stage by stage process and what a fully custom home includes.

Related: How to hire a custom home builder · Red flags to avoid when hiring a custom home builder