Remodeling Contract Loopholes to Watch Out For

FOR INFORMATIONAL PURPOSES ONLY. NOT INTENDED TO BE LEGAL OR FINANCIAL ADVICE.

The remodeling industry has a bad reputation. Much of that is earned with how some contractors run their business. Homeowners often get hit with costs mid-project in the form of a change order. What most don't realize is that the contract they signed already gave the contractor the leeway to add those charges.

Shugarman's Bath conducts more than 500 design consultations every month in San Diego and Orange County. We hear from homeowners regularly who have had a bad experience with remodelers. The contract language is what gave the contractor the ability to add those charges.

This article breaks down 14 specific clauses that show up in some remodeling contracts, what they mean, and how each one could impact your project.

Table of Contents:

• Why Do Remodeling Contracts Have So Many Loopholes?
• Contract Clauses That Could Cost You More
• Which Contract Clauses Should You Watch Out For?
• What Should a Remodeling Contract Include?
• What Is Your Next Step Before Signing a Remodeling Contract?

Why Do Remodeling Contracts Have So Many Loopholes?

Some remodeling contracts include clauses that shift financial risk from the contractor to you. A contractor may find something behind your walls during demolition. Your project can't move forward until they fix any problems found behind the walls.

They may include in their contracts a clause stating that those issues aren’t covered in the original contract price. That way, they could issue a change order with an additional cost. By that point, you might feel as though you have no choice but to pay.

Contract Clauses That Could Cost You More

Clauses in quotation marks reflect language you may see word-for-word in a contract. Clauses without quotation marks describe conditions or terms that may appear in different wording depending on the contractor.

Which Contract Clauses Should You Watch Out For?

Here are some contract clauses that appear in remodeling contracts and how each can impact your project cost. The clauses without quotation marks describe conditions or terms that may appear in different wording depending on the contractor.

"We are not responsible for any hidden or unforeseen conditions we find."

A contractor can't know exactly what's behind your walls until they open them up. The clause sounds reasonable on the surface, but it gives the contractor an open door to charge you for anything they find once demolition begins.

If they find rotted studs, mold, water damage, plumbing issues, or anything else that is “unforeseen” by the contractor, they could make it an extra expense for you.

"We are not responsible for inspecting, servicing, or modifying your existing plumbing pipes."

Seeing this means plumbing is not part of the job. The contractor might not modify your existing plumbing to accommodate the new installation. If plumbing is needed during your remodel, you may be on your own to pay for a separate plumber before work can resume.

“Substantial completion.” (Full payment is due when the contractor says they’re done.)

This clause means you may owe the full contract amount the moment the contractor decides the job is substantially complete. It doesn’t matter if you don’t agree with the contractor that the project is completed. You lose leverage to push back on unfinished work or quality issues once that payment is made.

"We will not be responsible for damage to plumbing in or around the work area."

A clause like this may give the contractor wiggle room to avoid responsibility for damages they might have caused to your plumbing.

For example, when old fixtures are removed, an existing fitting could get damaged in the process. You spot the leak sometime after your remodel. That repair cost falls on you, even though the damage happened during the contractor's work.

“We are not responsible for remediating mold."

The contractor will stop work if they find mold. You’ll need to hire a mold remediator before your remodel can continue.

Mold remediation can cost thousands of dollars and add weeks to your project timeline, depending on how soon the problem is resolved.

"We are not responsible for damage, including damage caused by leaks during or after the installation."

The contractor may get off the hook if their work is faulty. If a leak develops during or after your installation, this clause releases the contractor from any responsibility for any resulting water damage. That includes damage to your floors, walls, or anything else in the affected area.

"Terms and conditions of MFG warranties are the responsibility of the manufacturer, not the general contractor."

MFG is short for manufacturer. If a product installed during your remodel fails, the contractor is no longer involved. You will have to contact the product manufacturer directly to deal with the warranty claim.

"Your warranty is void if you choose to have alterations, maintenance, service, or repair made to the product or component by a third party."

If you hire anyone other than the original contractor who did the installation to service, repair, or make adjustments, you could void your warranty.

The contractor is not responsible for any mold found.

Mold often grows hidden behind walls long before a remodel begins. Once a contractor opens up your walls, they expose what was already there. They don't want to be held liable for a problem they didn't create or find. They shift the responsibility for decisions about mold solely onto you. You choose whether to remediate and who handles it.

Most general contractors and remodelers are not licensed mold remediators. Handling mold requires a completely separate specialist with specific licensing and testing. A clause like this implies they’re not responsible for handling mold.

Even if it falls within your warranty period, the contractor may point to this language and walk away. For example, if mold appears behind a newly tiled shower six months later, this clause could let them argue it was preexisting, not a result of their work.

Limited warranty excludes silicone, caulking, and all plumbing, fixtures, drains, cartridges, and shower or tub doors.

The warranty has firm limits on what it covers. Silicone, caulking, plumbing, fixtures, drains, cartridges, and shower or tub doors are all excluded. If any of those components fail after installation, you may have to pay for the repair or replacement out of pocket.

No specific length of labor warranty, and no specifics on what it covers.

A warranty that isn’t in writing may as well not exist. A verbal promise from a contractor to stand behind their work is rarely enforceable.

You’re left with no clear protection without those clear warranty specifics in writing.

Warranty voided for failure to perform recommended homeowner maintenance

You might see a warranty clause in a remodeling contract that excludes defects caused by "improper or insufficient maintenance." This may give the contractor a way out of a warranty claim if they can point to a missed maintenance step.

For example, a contractor recommends scheduling maintenance every 6 months. You push it to 9 or 10 months. If something fails, the contractor may point to that gap and deny the claim entirely, claiming you’re at fault.

Not responsible for incidental or consequential damage.

If something goes wrong with your remodel and causes a bigger problem, the contractor might not be liable for anything outside the original remodeling work.

For example, you have a leak that affects rooms around the tub and shower area. The contractor could claim they’re not responsible for the damages in the adjacent rooms. You could be the one paying for the damages.

The warranty doesn't cover caulk or sealant.

Many contractors use caulk or sealant as the first line of defense against water getting behind your walls. These materials do wear over time. If the caulking or other sealant fails because of how the contractor applied it, you might not have warranty coverage.

What Should a Remodeling Contract Include?

Before you sign anything, look for these details:

• A fixed price with a clear explanation of what is and isn't included.
• Specific language about how conditions behind the walls will be handled and whether repairs are covered.
• A labor warranty that states the exact length and what it covers.
• Clear terms on what voids the warranty and what doesn't.
• Who is responsible if something is damaged during the installation.

A contractor needs to have these details in writing.

Shugarman's Bath created the Never Any Extras Guarantee to address clauses like the ones above. The price in your contract is the amount you pay, and covered repairs are clearly defined before demolition starts. What's not covered is spelled out too.

What Is Your Next Step Before Signing a Remodeling Contract?

Remodeling contracts are dense, and most homeowners don't know what they're agreeing to until something goes wrong. Contracts tend to include language that protects the contractor at your expense.

Before you sign, read the contract. If you see any of the language above, ask the contractor to explain exactly what it means for your project cost.

Now that you know contract loopholes to watch out for, read our article on protecting your money when hiring a contractor.

Shugarman's Bath created the Never Any Extras Guarantee so you know exactly what your contract covers before work begins. Schedule a free design consultation, and we'll walk you through exactly what your contract covers before you sign anything.