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Key elements every home building contract should include

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Key elements every home building contract should include

By Drew Anderson, Partner

It’s no secret that Maine is experiencing a real estate boom. After a record-setting year in 2020, January home sales remained strong to kick off 2021, with sales of existing single-family homes in Maine jumping 18.4% compared with January 2020. The increased competition and rising sale prices have encouraged some prospective homeowners to consider building their own homes.

This can be a great option for those looking to invest in the Maine real estate market, but in addition to the other big decisions that come along with building a home from the ground up, an important first step is ensuring you have a secure home construction contract in place with your contractor.

While a contract should be a comprehensive recording of your agreement with your contractor, there are some key elements that can get overlooked without the proper review. If you’re preparing to enter a relationship with a contractor, it’s a good idea to have an attorney review your paperwork to make sure nothing has been inadvertently excluded. There are many state-mandated provisions that need to be included in a home construction contract. These include the following provisions that you’ll want to ensure are covered:

Outline of time frame

The contract should include both the estimated date work will commence as well as the estimated date work will be “substantially” completed. The contract can state that dates may be subject to change “due to circumstances beyond the control of the contractor, including, but not limited to, lack of readiness of the job site or the unavailability of building materials.”

Deposit not to exceed ⅓ of contract price

Your agreement should have the total contract price, including all costs to be incurred, or, if calculated through a “cost-plus” formula, the agreed-upon price and an estimate of the costs for labor and materials. The contract should also specify the method of payment, and it’s important to note that any required deposit cannot exceed 1/3 of the contract price.

Acknowledgment of Energy Efficiency Building Performance Standards

A contractor should include a statement acknowledging that Chapter 214 (“Energy Efficiency Building Performance Standards”) establishes minimum energy efficient building standards for new residential construction and a representation that the new building will either meet or exceed those standards.

Attorney General contact information

Finally, your home building contract should include contact information for the Attorney General’s office to protect consumers. This might look something like:


Consumers are strongly advised to visit the Attorney General’s publicly accessible website to gather current information on how to enforce their rights when constructing or repairing their homes.

The Attorney General’s publicly accessible website address is: http://www.state.me.us/ag

The Attorney General’s telephone number is: (207) 626-8800

If you’re considering building your own home, an attorney can play a crucial role in ensuring that you’re protected throughout the process. Our real estate attorneys are available to provide legal support as you embark on the home building process.