Construction renovation contract – Part 1

Construction renovation contract – why is it necessary and what should it include? Part 1

Construction renovation contract – why is it necessary and what should it include? A home renovation often begins with a conversation: what needs to be done, approximately how much it will cost, and when it can be completed. When it comes to painting a single room or another small job, such an arrangement may seem sufficient. However, with a complete renovation of an apartment, house, bathroom, or office, the situation is entirely different.

A construction renovation contract defines exactly what the client commissions and what the construction company undertakes to carry out. It can clearly specify the scope of the construction and renovation works, the price or the method for determining it, deadlines, payments, materials, additional works, acceptance of the completed project, and warranty terms.

A well-prepared contract is not a sign of distrust between the client and the contractor. Quite the opposite – it establishes clear rules before the renovation even begins.

Why do we need a construction renovation contract?

One of the most common causes of disputes during construction and renovation projects is a different understanding of what was actually agreed.

The client may believe that a particular task is included in the original price, while the contractor considers it additional work. There may also be different expectations regarding who supplies the materials, when a particular stage should be completed, or when the next payment is due.

At the beginning, all these matters may seem easy to clarify verbally. After several weeks of work, dozens of completed operations, material deliveries, and changes to the original plan, however, it becomes much more difficult to establish who said what.

A written contract significantly reduces this kind of uncertainty.

Under Bulgarian legislation, the relationship between a client and a contractor for this type of work falls within the provisions governing contracts for work under Art. 258 et seq. of the Obligations and Contracts Act (OCA). Under a contract for work, the contractor undertakes, at their own risk, to perform the commissioned work, while the client undertakes to pay the agreed remuneration.

The contract protects not only the client

A renovation contract is sometimes mistakenly viewed as a document intended solely to protect the client.

A properly drafted contract protects both parties.

The client gains clarity about what will be carried out, under what conditions, within what timeframe, and for what remuneration. The contractor, in turn, has a document defining the work originally commissioned, allowing it to be distinguished from additional requests and changes made later.

This is particularly important in major renovations because situations that could not have been fully anticipated during the initial inspection almost always arise once work is underway.

1. What exactly are we renovating?

One of the most important parts of the contract is the subject and scope of the commissioned work.

“Apartment renovation” is not a sufficiently specific description.

A major renovation may include demolition work, installation or modification of electrical and plumbing systems, drywall installation, plastering, screeding, waterproofing, skim coating, painting, laying flooring and wall coverings, installing sanitary fixtures, lighting, and many other operations.

The more precisely the scope is defined, the lower the likelihood of a later dispute over whether a particular task was included.

For larger projects, a practical solution is to include a detailed description of the construction and renovation works as an appendix to the contract.

2. The quotation and bill of quantities and costs

For a more complex renovation, the contract does not need to describe every individual construction operation across several pages.

A detailed quotation or bill of quantities and costs can be attached to it and explicitly designated as an integral part of the contract.

This makes it clear, even before the renovation begins, which activities are planned, what quantities have been calculated, and how the overall price has been determined.

There is one important rule here:

The more precisely it is stated what is included in the price, the less room there is for different interpretations later.

3. How is the renovation price determined?

Naturally, price is one of the key issues in every construction renovation contract.

Depending on the nature of the project, the parties may agree on a fixed total price, unit prices for specific construction and renovation works, payment based on quantities actually completed, or a combination of these methods.

However, it is essential to make clear what the stated price includes.

For example:

• labour only;
• labour and specified materials;
• transport;
• removal of construction waste;
• delivery and carrying of materials to the property;
• demolition work;
• other associated services.

This is precisely where the misunderstanding “I thought that was included in the price” often arises.

That is why a good quotation and a good contract should work together.

4. Advance and stage payments

For a longer construction renovation project, it is sensible to determine the payment method from the outset.

Instead of resolving the matter as the work progresses, the contract may specify an initial advance payment followed by subsequent payments upon completion of particular stages.

For example, payments may be linked to the completion of demolition work, installations, structural or rough construction work, finishing work, or the final handover of the property.

There is no universal payment scheme suitable for every renovation. What matters is that the terms are known in advance and clearly understood by both parties.

5. Who purchases the construction materials?

This issue should not be left to a verbal agreement either.

Depending on how the renovation is organised, materials may be supplied by the contractor, the client, or by both parties for different categories of products.

For example, the construction company may supply the basic construction materials, while the property owner selects and purchases tiles, sanitary ware, lighting fixtures, and other visible finishing elements.

In all cases, it should be clear who is responsible for the selection, purchase, and timely delivery of the materials.

This also matters for deadlines. If a particular activity cannot begin because tiles, sanitary ware, or another material that the client has undertaken to provide has not been delivered, such a delay should not automatically be treated as a delay caused by the contractor.

6. The renovation deadline must be realistic

“It should be finished in about a month” is not a particularly good contractual clause.

Whenever possible, the contract should specify when the work begins and the deadline for completing the agreed works.

However, the timeframe must be realistic, not merely attractive to the client.

Renovation work involves technical processes that require time. Screeds, plasters, skim coats, waterproofing systems, adhesives, and other materials have technical and curing requirements that should not be ignored simply to shorten the deadline on paper.

It is also advisable to specify in advance how circumstances that objectively affect the schedule will be handled – delayed deliveries, changes requested by the client, additional works, or problems discovered after demolition.

Conclusion – the contract lays the foundation before the renovation begins

A well-prepared construction renovation contract should answer the fundamental questions before any work begins: what will be renovated, which construction and renovation works are included, how the price is determined, when and how payments will be made, who supplies the materials, and within what timeframe the renovation must be completed.

However, this is only the first part of the relationship between the client and the construction company.

Once the renovation begins, hidden problems, unforeseen work, or new requests from the property owner may arise. This is precisely when it becomes particularly important for the contract to have established in advance how additional construction and renovation works are commissioned, how changes are documented, and how they affect the final price and deadline.

In Part 2 of “Construction renovation contract – why is it necessary and what should it include?”, we will examine these situations in detail.

We will look at:

• additional and unforeseen construction and renovation works;
• changes made during the renovation;
• acceptance and handover of the completed project;
• defects and their rectification;
• warranties for completed construction and renovation works;
• the main clauses that should be included in the contract;
• warning signs clients should pay attention to before the renovation begins.

Because signing the contract is only the beginning. Its true value becomes apparent when a situation arises during the renovation that cannot be resolved simply by saying, “that’s what we agreed.”

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