Construction · 2026-06-17

How to Read a Construction Contract (and the Payment Terms That Should Worry You)

Before you sign for a remodel or addition, learn which contract terms protect you and which deposit demands are a red flag.

A solid construction contract is your best protection on any sizable project. At minimum, it should spell out the full scope of work, specific materials and brands, a start and substantial-completion date, the total price, and a clear payment schedule tied to milestones rather than dates. If a contractor hands you a one-page estimate and asks you to sign it as the contract, slow down and ask for a real agreement. Vague language like "miscellaneous materials" or "as needed" is where disputes are born.

Pay close attention to the deposit and draw schedule. A reasonable deposit is typically a modest percentage to secure scheduling and order materials, with the rest paid in installments as defined stages are completed and inspected. Be cautious of anyone demanding a very large share of the total upfront, pushing you to pay cash only, or wanting full payment before work begins. Tie each payment to verifiable progress, and always hold a final retainage until the punch list is done and any required inspection passes.

You can absolutely review and negotiate a contract yourself, and you should never feel rushed into signing. For a large project, a one-time review by a construction attorney is money well spent. If the numbers or terms feel off, getting a second written bid from an established general contractor in your area gives you a useful benchmark and more leverage.

Relevant resource: an established general contractor in your area.