Where to get a contract to use with subcontractors
If you have hired a subcontractor to help with your projects, you will need to create a building contract. A building contract between you and the subcontractor will clear up expectations and establish a clear understanding about how your relationship will work.
You can get a building contract from your current builder or you can write one up yourself. Here are the steps you need to take when making a building contract with a subcontractor:
Writing the building contract
A contract protects you and the subcontractor from any problems or issues that may arise. The building contract doesn't need to be complex, and you and the subcontractor can modify it in case there is something that comes up.
Terms of employment
You need to clearly define the subcontractor's employment with you. If you hire them to be a temporary employee, you will need to withhold taxes and pay them yourself and have them fill out the proper tax forms so you can prepare a W-2. It's easier to hire them as an independent contractor since you simply complete a 1099-Misc form and report the contractor's income to the IRS. You can download business software that can keep track of all the paperwork for you.
Non-complete Clause
A non-complete clause will specify that the subcontractor cannot work for you after a certain period of time following the completion of the project. This is mostly to protect you from having to report them as an employee. Many subcontractors will work through the main builder or contractor and will work for them instead of you, as this would put them in competition with the builder.
Indemnification/ Liability
This is the part of the building contract that gets detailed. You need to clearly state what liability you assume as the owner of the home and what liability the subcontractor assumes. If you are doing a contract with the prime contractor as well, they need to be responsible for certain parts as well. Draw a line between liability for technical accuracy and actual damages. The prime contractor should be responsible for the accuracy of the work, and the subcontractor should be responsible to complete their work to the best of their knowledge and skills. Negligent or willful acts resulting in bodily injury or property damage should be assumed by the subcontractor.
Payment Terms
Will you pay the subcontractor by the hour or by the project? Will you pay within a certain period after receiving the work? Be careful that you don't get into trouble by commissioning more work than you can afford.
Assumptions Clause
An assumptions clause will spell out your expectations, like a minimum of hours worked and if the subcontractor can work overtime hours and weekends.
If you have drawn up this contract with your main contractor, compare it to your original building contract to make sure nothing is conflicting. For example, if a subcontractor is responsible for installing a roof and they are given the wrong roofing tiles by the main contractor, you need to set up in your contract who will be responsible for fixing this.
The subcontractor is there to work for you. Inform the subcontractor when it is appropriate to contact you directly or if you prefer for them to work with the main contractor directly. Address safety issues with the subcontractor and other expectations such as dress code. Typically, most subcontractors have a dress code policy in place to help prevent injuries from occurring on site, be sure to review this.
Cover anything that they need to know so they are aware of your expectations and can establish a healthy relationship with you.
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