Construction Contracts

Stop. Don’t Sign That Contract Yet.

Daniel here. If you’re about to sign a construction contract… wait. Seriously. The contract your contractor gave you? It’s written to protect them, not you.

I learned this the hard way (and by reading a million forums). Here’s what you actually need to know.

1. get a lawyer (a real one)

Not your cousin who does corporate law. Not your neighbor. Get a construction lawyer. Yes it costs money. But you know what costs more? A contractor disappearing with 1 million pesos. (Happens all the time. Check any facebook group).

2. payments: don’t be nice

Contractor will ask for: “50% downpayment sir, for materials”. Answer: NO. Never pay 50% upfront. If you do, you lose all leverage. They have your money, you have… a promise?

Better schedule:

• 10-15% down (max)
• 20% after foundation
• 20% after roof
• …you get the idea. Pay for completed work.

3. the “delay” trap

Contracts usually say nothing about delays. So the contractor takes 2 years to build a 6-month house. And what can you do? Nothing.

Put this in the contract: “Liquidated damages.” Basically: “For every day you are late, you pay me X pesos.” Watch how fast they work when that clause is in there.

4. things nobody tells you

Lien Waivers idk why nobody talks about this. If your contractor doesn’t pay his suppliers (hardware store), the store can come after YOU. Even if you paid the contractor! Get a lien waiver. Basically a receipt saying “I paid everyone”.

Retention Keep 5-10% of the total money until 3 months AFTER the house is finished. Why? Because the roof will leak the first time it rains. If you paid everything, good luck getting them back to fix it. If you still have 100k of their money? They’ll come running.

5. quality checks

“Sir, standard finish.” What does “standard” mean? To you: smooth, perfect paint. To them: bumpy, one coat, maybe missed a spot.

Be specific.

• “3 coats of Boysen Permacoat” (brand names!)
• “Tiles tied with tile adhesive, not cement”
• “6063-T5 aluminum” (not recycled scraps)

finding hidden costs

They love “allowances”. “Tile allowance: 50 pesos/sqm.” Go to Wilcon. Can you find a tile for 50 pesos? No. The cheapest one is like 150. So you end up paying the difference. Check the allowances before you sign.

final advice

Read the whole thing. If you don’t understand a sentence, don’t sign. Ask “what happens if you run away?” Ask “who pays if materials price go up?”

And seriously… get that lawyer. It’s the best insurance you’ll ever buy.