Construction FAQ

What is considered "construction"?

The terms “construction,” “moving,” “conversion,” “alteration,” “remodeling,” “renovation” or “addition” are all common terms used to describe a building which is under construction.

How do I find a builder?

You will need to do some research, but the effort will benefit you in many ways.  (Please keep in mind that the builder works for you, as the borrower, not for the bank.)


  • Contacting your local Builders Association for recommendations
  • Obtaining a number of bids
  • Asking the builder for proof of personal liability and workers compensation coverage, and property damage coverage or bonding, especially if the coverage is required in your community or state
  • Asking the builder for a list of references including recent homeowners with projects similar in scope to your planned project. (Then contact them - ask about the builder's budget management, adherance to the original timeline and how he managed his sub-contractors.)
  • Touring projects the contractor has already completed

What permits or inspections are needed for a construction project?

The building inspection department, office of planning and zoning, or department of permits in your community will have a listing of permits and inspections related to building and zoning codes required for new construction or remodeling.  Your builder should ensure that all necessary permits are obtained.

How long is a permit valid?

Permits are valid for a certain number of days from the date of issuance or from the date of the last inspection.  The time length varies between communities.

Is a home inspection the same as a building inspection?

Generally, no.  Home inspectors typically evaluate an existing home upon the sale or purchase of the property.  Home inspectors evaluate readily accessible systems and components of a home.  A building inspector evaluates the building project at various stages of construction (i.e.., plumbing, electrical, etc.) to verify adherence to local building codes.  Be aware that some jurisdictions require a certificate of occupancy before you are allowed to move into the home.  This certificate is given only after the home passes the final building inspection.

What should be included in a construction contract?

A contract is a document that clearly states the expectations, responsibilities and rights of the parties involved in a project.  Any verbal communication or “agreement” between the parties that is not added to the contract is deemed not to exist.  Some key items to look for in a construction contract include:

  • The contractor’s name, address, and phone
  • Verification of insurance or bonding the contractor and sub-contractors are required to carry.  Otherwise, you could be held liable for any injuries or damages that may occur during the construction of your home.
  • A list of any subcontractors who may be used to construct your home
  • A clear description of the work that is to be performed
  • A description of the materials, products and equipment to be used
  • Start and estimated completion dates
  • Procedures for change orders
  • A request to be given all written warranties from any appliances, equipment or materials used in the project
  • The down payment amount and draw schedule
  • A method for settling any disputes that may occur during the construction project, such as mediation
  • Information about a warranty for the work

I've changed my mind about what I want. Can I make a change to the project?

Typically, yes.  The type of change and when the change request occurs can greatly impact the ability to physically make the change, as well as the associated costs.  Changes should be agreed to in writing with a “change order” noting what is to be changed as well as the costs. Typically, the builder will collect those costs from you prior to implementing the requested change.

The builder is asking for a large down payment on the project. Do I have to pay this?

Most builders ask for a down payment, although the specific amount will depend on what is agreed to in your contract.  Be very cautious about any builder who asks for the entire amount up front.  Typically the bank would not agree to funding all costs up front.


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