The short answer
Contracts and legal documents are the written estimates, agreements, change orders, policies and permissions that set what you will do, for how much and on what terms. They matter because clear paperwork prevents most payment disputes, protects you when something goes wrong and makes you look professional to customers.
Key Points
The three things to take away.
- 1
Core customer agreement
Use one master customer agreement for every job, written or reviewed by an attorney in your state. It should name both parties, describe the work, set the price and payment schedule, and cover warranties, delays, cancellations, disputes and who handles permits.
Many states require certain terms in home improvement contracts, such as a right to cancel notice or lien rights disclosures, so ask your attorney. Send the agreement for electronic signature through your estimating or e-sign software so it is signed before work starts and stored with the job. Never start on a verbal yes alone.
- Have an attorney draft your master agreement
- Add any notices your state requires
- Collect e-signatures before work starts
- Store signed copies with each job
- 2
Estimates and proposals
Give every customer a written estimate or proposal that lists the work, materials, price, what is not included and how long the price is good for. Say clearly whether it is a fixed price or an estimate that may change.
Use a standard template so every proposal looks the same and nothing gets left out. Estimating software or your field service app can build proposals from your price list, send them by email or text and let the customer approve online. When the customer accepts, the proposal should flow into your signed agreement, not replace it.
- Build one proposal template for all jobs
- List exclusions and how long the price holds
- Send proposals with online approval
- Link the accepted proposal to the contract
- 3
Scope and changes
Describe the scope of work in plain, specific terms, including materials, brands, sizes, quantities and the finished result. Vague scope is the biggest cause of fights about money.
When the customer asks for something new or conditions change, write a change order before doing the extra work. List what changes, the added or reduced cost and any change to the schedule, and get it signed. A field service app lets you create and sign change orders on site from your phone. Keep every change order with the job file so your final invoice matches what was agreed.
- Write scope with materials and quantities
- Stop and write a change order for extras
- Get each change order signed first
- Match the final invoice to all changes
- 4
Customer policies
Write down your policies for payments, deposits, late fees, cancellations, warranties, refunds and scheduling. Put the key points in your customer agreement and post them on your website so customers see them before they hire you.
Keep the language short and plain. Check with your attorney before setting late fees or deposit amounts, since some states limit them, especially for home improvement work. Train your team to explain the policies the same way every time. Clear policies cut down on arguments and make collecting payment much easier.
- Write payment, cancel and warranty policies
- Ask your attorney about deposits and fees
- Post the policies on your website
- Add them to your customer agreement
- 5
Website and marketing permissions
Get written permission before you use a customer's name, photos of their home, a testimonial or a review on your website, Google Business Profile or social media. A short release added to your agreement, with a box the customer can check, works well.
Get written consent before sending marketing emails or texts, and follow the federal CAN-SPAM and TCPA rules on opt-outs and consent. Only use photos you took or have the rights to. Keep the signed releases with the job so you can prove permission. Remove content quickly if a customer asks.
- Add a photo and review release to contracts
- Get opt-in before marketing emails or texts
- Use only photos you own or licensed
- Remove content quickly when asked
- 6
Contractors and subs
Sign a written subcontractor or independent contractor agreement with everyone you hire who is not an employee. Cover the scope, price, schedule, insurance, licenses, safety, who supplies materials, warranty, cleanup and how they get paid.
Collect a W-9, a current certificate of insurance and a copy of their license before they start. Require them to follow your customer agreement terms and to talk to customers only as you direct. If they create content, designs or software for you, include a clause that assigns ownership to your business. Have your attorney review the template.
- Use a written agreement with every sub
- Collect W-9, insurance and license first
- Include ownership terms for creative work
- Have your attorney review the template
Mistakes to avoid
- Starting work on a verbal yes and a text message instead of a signed agreement.
- Doing extra work without a signed change order, then arguing over the bill.
- Posting customer photos and reviews online without written permission.
Common questions
What should a contractor agreement include?
It should name both parties and cover the scope, price, payment schedule, timeline, warranties, changes, cancellation and disputes. Many states require extra notices for home improvement work. Have an attorney in your state review your template.
Is an estimate a binding contract?
An estimate alone is usually not a full contract, but a signed proposal with clear terms can be binding. Use a signed customer agreement to avoid confusion. Ask your attorney how your state treats them.
How do I handle extra work a customer asks for?
Write a change order that lists the new work, cost and any schedule change, and get it signed before you start. Add it to the job file so the final invoice matches.
Can I post photos of a customer's home on my website?
Only with their written permission. Add a simple photo and testimonial release to your agreement, and keep the signed copy with the job.
General information only, not legal, tax or financial advice. See the Disclaimer.