3 Things General Contractors Should Know Before Entering a New Construction Contract

Jun 25, 2021 | Construction Law

Idaho law provides a variety of rules for general contractors to follow. Before entering a new construction contract, general contractors should make sure to do the following:

  1. Provide Disclosures
  2. Display Registration Number
  3. Outline Expected Project Amounts.

Provide Disclosures 

Before entering into a contract that exceeds $2,000, the contractor needs to disclose that the residential property owners or purchasers can: (1) get lien waivers from subcontractors upon request (at the property owner’s or purchaser’s expense); (2) request proof of the contractor’s general liability insurance and evidence worker’s compensation insurance; (3) have the title insurance covering liens extended if the opportunity arises; and get a surety bond (at the property owner’s or purchaser’s expense) — not exceeding the construction project’s value. The disclosures must be acknowledged by the property owners or purchasers and a copy of the disclosures must be provided. The original must be kept by the contractor. 

Additionally, the contractor must provide a written document with his/her signature and the subcontractor’s, materialmen’s, and rental equipment provider’s business name, address, and phone number to the owners or purchasers. This information must be provided within a reasonable time prior to closing or the final payment on the project. The contractor is exempt from this section if the parties initiated the contract intending for the contractor to provide necessary repairs to for an emergency or repairs to the electrical, plumbing, or water system.

Display Registration Number

Within 60 days of registration, the contractor’s registration number needs to be prominently displayed on the front of all permits, businesses, advertisements, contracts, letterheads, and purchase orders. For details on the registration requirements under Idaho law, please review our blog post on the Idaho Contractor Registration Act.

Outline Expected Project Amounts

The contractor also needs to clearly outline expected project amounts in the contract, as the contractor can only recover the amount set out in the contract plus any amount found by the court (after all claims by other parties are deducted) when filing for a lien.

If you have any questions about general contractor requirements, or if you need assistance with drafting a construction contract, please contact our office.

This blog post is designed to provide general information on pertinent legal topics. The statements made are provided for educational purposes only. This blog does not provide legal advice. This blog does not create an attorney-client relationship between you and Smith + Malek, PLLC. If you want to create an attorney-client relationship and have specific questions regarding the application of the law to your own circumstances, you should contact our office.