15 Questions to Ask Before Signing with a Home Builder

You have done your research. You have interviewed builders, compared bids, visited job sites, and narrowed your list to a finalist. Now you are sitting across the table from a builder with a contract in front of you and a pen in your hand.

This is the moment that matters most.

Everything you negotiated, every promise made during the sales process, every assurance about quality and timelines — it either lives in the contract you are about to sign or it does not exist at all. Verbal agreements are nearly impossible to enforce in construction disputes. The contract is your only real protection, and the questions you ask right now determine whether that protection is ironclad or full of gaps.

This guide is different from a general builder interview checklist. That earlier stage is about evaluating whether a builder is the right fit. This stage is about protecting yourself legally and financially at the moment of commitment. These 15 questions are specifically designed for the contract review and signing meeting — the last line of defense before you are legally and financially bound.

Print this list. Bring it to your signing meeting. Do not let anyone rush you past a single question.

Pro Tip: Never sign a builder contract at the first sitting. Take the document home, read every page, and have a real estate attorney review it before you commit. Any builder who pressures you to sign immediately is waving a red flag.

---

1. Is Every Verbal Promise Written Into This Contract?

Why this matters: During the sales process, builders make promises. They tell you about the upgraded countertops they will include, the timeline they will hit, the landscaping package that comes standard. If those promises are not written into the contract, they are legally meaningless. Courts enforce what is on paper, not what was said over coffee.

What a good answer looks like: A reputable builder will welcome this question and walk you through the contract to show you where each discussed item appears. They may point to the specifications addendum, the scope of work exhibit, or a separate inclusions list that is incorporated by reference. The key phrase you want to hear is, “If it is not in the contract, let us add it right now.”

Red flags to watch for:

• “You have my word on that” without willingness to add it in writing
• Claims that certain promises are “standard practice” and do not need to be documented
• Resistance to adding an addendum for items discussed during negotiations
• A contract that uses vague language like “builder-grade finishes” without specifying exact products, brands, or model numbers

Before signing, cross-reference your notes from every meeting and phone call against the contract language. Every material, finish, fixture, and feature should be identified by brand, model, color, and grade wherever possible. If your builder committed to specific custom home features, verify each one appears in the specifications document attached to the contract.

---

2. What Exactly Is the Total Contract Price, and What Does It Include and Exclude?

Why this matters: The contract price is not just a number. It is a boundary that defines everything your builder is obligated to deliver and, more importantly, everything they are not. Many homeowner disputes stem from assumptions about what was “obviously” included. If the contract says $450,000, you need to know precisely what that buys you and what will cost extra.

What a good answer looks like: The builder should provide a detailed cost breakdown or a comprehensive scope of work document that itemizes every major category: site work, foundation, framing, roofing, exterior finishes, plumbing, electrical, HVAC, insulation, drywall, interior finishes, cabinets, countertops, flooring, appliances, fixtures, landscaping, and driveway. Each category should have a line-item cost or a clearly defined allowance.

Red flags to watch for:

• A single lump-sum price with no itemized breakdown
• Exclusions buried in fine print (permit fees, utility connections, grading, soil testing, survey costs)
• Allowances that seem unrealistically low for your market
• Language that gives the builder discretion to substitute “equivalent” materials without your approval

Pro Tip: Request a two-column document: one column listing everything included in the contract price and a second column listing everything excluded. This eliminates ambiguity and becomes a powerful reference tool throughout the build. For a deeper understanding of what drives total project costs, see our guide on the true cost of building a custom home.

---

3. How Are Change Orders Handled, Priced, and Approved?

Why this matters: Change orders are one of the most common sources of cost overruns in residential construction. Almost every build involves at least a few changes, whether initiated by the homeowner or necessitated by site conditions. The change order clause in your contract determines how much those changes will cost you, how they are documented, and who has approval authority.

What a good answer looks like: The contract should include a formal change order process that requires written documentation of every change, including a detailed description of the modification, the cost impact (both additions and credits), the timeline impact, and signatures from both parties before any work begins. A fair markup on change orders is typically 10 to 20 percent above actual material and labor costs.

Red flags to watch for:

• No formal change order process defined in the contract
• Excessive markups on changes (some builders charge 30 to 50 percent above cost)
• Language allowing the builder to make changes without your written approval
• No requirement for cost estimates before change work begins
• Clauses that allow the builder to charge for changes verbally authorized on the job site

Make sure the contract specifies that no change order is valid without both parties’ written signatures and that you will receive a cost estimate before approving any change. This single clause can save you thousands of dollars.

---

4. What Is the Payment Schedule, and How Are Draws Tied to Completed Work?

Why this matters: How and when you pay your builder directly affects your financial risk. If you pay too much too early, you lose leverage if problems arise. If the payment schedule is not tied to verified milestones, you could find yourself having paid 80 percent of the contract price when only 50 percent of the work is complete.

What a good answer looks like: The contract should define a draw schedule with specific milestones: completion of foundation, framing, rough-in mechanical systems, drywall, and final completion. Each draw should correspond to a reasonable percentage of the total contract price that reflects the actual value of work completed. A common structure is five to seven draws spread across the project. The builder should also require lender or independent inspector verification before each draw is released.

Red flags to watch for:

• A large upfront deposit exceeding 10 percent of the contract price
• Front-loaded payment schedules where 50 percent or more is due before framing is complete
• No requirement for third-party verification of completed work before draws are released
• Payment milestones that are vague or subjective (“when the builder deems framing complete”)
• No holdback or retainage clause for the final payment

Pro Tip: Negotiate a 5 to 10 percent retainage on the final payment that is not released until all punch-list items are complete, final inspections are passed, and you have conducted a thorough walkthrough. This retainage is your strongest leverage to ensure the builder finishes everything properly.

---

5. What Happens if the Builder Misses the Completion Deadline?

Why this matters: Construction delays are common, but that does not mean you should bear the full financial burden of a missed deadline. If you are renting while your home is built, paying for storage, carrying two mortgages, or facing a rate-lock expiration, every extra month costs real money. The contract should address what happens when the builder runs late.

What a good answer looks like: Look for a liquidated damages clause that specifies a daily or weekly penalty the builder pays for each day beyond the contracted completion date, with reasonable exceptions for force majeure events (natural disasters, government-imposed delays, material shortages beyond the builder’s control). A typical liquidated damages amount ranges from $100 to $250 per day. The contract should also define “substantial completion” clearly so there is no ambiguity about when the deadline has been met.

Red flags to watch for:

• No completion date specified in the contract at all
• A completion date with so many exceptions that it is effectively meaningless
• Language that gives the builder unlimited time extensions at their sole discretion
• No financial consequence for missing the deadline
• Force majeure clauses that are overly broad (including things like “subcontractor delays” or “material availability,” which are the builder’s responsibility to manage)

Understanding how builders manage timelines is a critical part of the building process. If the contract does not hold the builder accountable for delays, you have no recourse except expensive litigation.

---

6. What Structural Warranty Coverage Is Included, and Who Backs It?

Why this matters: A structural warranty protects against the most catastrophic and expensive defects in your new home: foundation failures, load-bearing wall defects, roof structure failures, and other issues that affect the structural integrity of the building. These problems can cost tens of thousands of dollars to repair and may make your home unsafe. The warranty is only as reliable as the entity standing behind it.

What a good answer looks like: The builder should provide a minimum 10-year structural warranty that covers major structural components including the foundation, load-bearing walls, beams, columns, roof framing, and floor systems. Ideally, this warranty is backed by a third-party warranty provider such as 2-10 Home Buyers Warranty (2-10 HBW), StructureGuard, or PWSC rather than relying solely on the builder’s own guarantee. Third-party backing means your warranty survives even if the builder goes out of business, gets acquired, or stops honoring claims.

Red flags to watch for:

• Structural warranty coverage of less than 10 years
• Warranty backed solely by the builder with no third-party insurer
• Vague definitions of what constitutes a “structural defect”
• Exclusions for foundation settling, soil movement, or water damage to structural components
• No clear claims process or contact information for the warranty provider

Pro Tip: A builder-only warranty is only as good as the builder’s solvency and willingness to honor claims. Third-party warranty programs like 2-10 HBW provide an independent backstop. Even if your builder offers their own warranty, consider purchasing supplemental third-party structural coverage for additional peace of mind. The cost is typically $500 to $1,500 — a fraction of what a single structural repair could run. Learn more about coverage tiers and claims processes in our detailed guide to understanding home builder warranties.

---

7. What Are the Warranty Exclusions, and What Maintenance Is Required to Keep Coverage Valid?

Why this matters: Every warranty has exclusions, and many homeowners do not discover them until they file a claim and get denied. Equally important are the maintenance obligations that most warranty programs impose. If you fail to perform required maintenance, the warranty provider can deny your claim entirely — even for a legitimate defect.

What a good answer looks like: The builder or warranty provider should give you a written list of all warranty exclusions and a maintenance schedule you must follow to keep your coverage in force. Common exclusions include cosmetic issues after the workmanship period, damage caused by homeowner modifications, normal wear and tear, and landscaping. Maintenance requirements typically include annual HVAC servicing, gutter cleaning, caulking inspection, grading maintenance around the foundation, and prompt reporting of any issues.

Red flags to watch for:

• Refusal to provide a complete list of exclusions before signing
• Maintenance requirements that are unreasonably burdensome or vaguely defined
• Exclusions so broad that they effectively gut the warranty (for example, excluding all moisture-related damage in a region with high humidity)
• No written maintenance guide or homeowner manual
• Language stating the builder has “sole discretion” to determine whether a claim is covered

Ask for a sample warranty document before you sign the construction contract. Review it with the same scrutiny you give the contract itself. If the builder uses a third-party warranty program like 2-10 HBW, request the program’s full terms and conditions — not just the marketing summary. The exclusions section is where warranties reveal their true value.

---

8. Is the Warranty Transferable if You Sell the Home?

Why this matters: Warranty transferability directly affects your home’s resale value. A remaining structural warranty that transfers to the next buyer is a significant selling point and can justify a higher asking price. Conversely, a non-transferable warranty dies the moment you sell, which reduces the home’s attractiveness to buyers who value post-purchase protection.

What a good answer looks like: The best warranty programs are fully transferable to subsequent homeowners for the remainder of the warranty period, often with a nominal transfer fee ($50 to $250). Third-party warranty providers like 2-10 HBW generally include transferability as a standard feature. The builder should confirm in writing whether the warranty transfers automatically or requires a formal transfer process, and what fees, if any, are involved.

Red flags to watch for:

• The warranty is explicitly non-transferable
• Transfer requires the builder’s approval (which can be withheld)
• Excessive transfer fees ($500 or more)
• Transfer restrictions that limit coverage for the second owner (for example, reducing the structural warranty from 10 years to 5 years upon transfer)
• No clear documentation of the transfer process

Pro Tip: Even if the builder’s own warranty is non-transferable, a separately purchased third-party warranty through a program like 2-10 HBW almost always includes transferability. This is another strong reason to invest in supplemental third-party coverage regardless of what the builder provides. It protects you now and adds value when you sell.

---

9. What Insurance Coverage Does the Builder Carry, and Will You Be Listed as an Additional Insured?

Why this matters: Construction is inherently risky. Workers get injured, materials are stolen or damaged, fires and storms can destroy partially completed structures, and subcontractors can cause damage to neighboring properties. If the builder does not carry adequate insurance, you could be held liable for accidents or losses on your own property.

What a good answer looks like: At minimum, the builder should carry general liability insurance (at least $1 million per occurrence), workers’ compensation insurance for all employees, and builder’s risk insurance covering the structure during construction. The builder should be willing to add you as an additional insured on their general liability policy, which gives you direct access to their coverage if a claim arises. Ask for certificates of insurance naming you as additional insured before construction begins.

Red flags to watch for:

• Builder cannot provide current certificates of insurance
• No workers’ compensation coverage (“all my workers are independent contractors” is a common and dangerous excuse)
• General liability limits below $1 million
• No builder’s risk policy or the expectation that you will purchase one yourself
• Refusal to add you as an additional insured
• Policies that lapse during construction (request to be notified of cancellations)

Verifying builder credentials and insurance is a non-negotiable step. Your lender will likely require proof of builder’s risk insurance, but you should independently verify all coverage types.

---

10. How Are Disputes Resolved Under This Contract?

Why this matters: If something goes wrong during or after construction, the dispute resolution clause determines how you can seek a remedy. Some contracts require binding arbitration, which means you waive your right to sue in court. Others include mandatory mediation as a first step. The method of dispute resolution significantly affects your options, costs, and likelihood of a favorable outcome.

What a good answer looks like: The ideal contract includes a tiered dispute resolution process: direct negotiation first, followed by formal mediation with a mutually agreed-upon mediator, and only then arbitration or litigation as a last resort. If arbitration is included, it should be administered by a recognized body (such as the American Arbitration Association) with rules that protect both parties. The contract should specify who pays for mediation and arbitration costs.

Red flags to watch for:

• Binding arbitration as the only option with no mediation step
• The builder selects the arbitrator unilaterally
• Arbitration in a distant location that makes it impractical for you to participate
• Waiver of your right to participate in class action lawsuits
• A clause requiring you to pay the builder’s attorney fees if you lose (without reciprocity)
• Very short statutes of limitation that cut off your right to make claims (some contracts limit claims to one year, even for structural issues)

Pro Tip: Have your attorney pay special attention to the dispute resolution clause. This is the section that determines your power if the relationship breaks down. A fair contract gives both parties equal access to resolution mechanisms.

---

11. What Happens if the Builder Goes Out of Business During Construction?

Why this matters: Builder insolvency during construction is more common than most people realize, particularly among smaller custom builders and during economic downturns. If your builder goes bankrupt halfway through your project, you could be left with a partially built house, no funds to complete it, and no recourse against a dissolved company.

What a good answer looks like: The contract should address builder default, including your right to terminate the agreement and recover costs if the builder abandons the project or becomes insolvent. Ask whether the builder carries a completion bond or performance bond that guarantees a third party will finish the work if the builder cannot. If the builder participates in a third-party warranty program, confirm that the warranty obligation transfers to the warranty company, not the builder personally. This is another area where programs like 2-10 HBW offer critical protection — the warranty survives the builder.

Red flags to watch for:

• No contract provisions addressing builder default or insolvency
• No performance bond or completion bond
• Builder warranty that terminates if the builder ceases operations
• No escrow arrangement for construction funds (your money goes directly to the builder with no third-party oversight)
• Inability or unwillingness to provide financial references or evidence of stability

Financially stable builders will not be offended by these questions. They understand that you are making a significant investment and deserve assurance that your project will be completed regardless of circumstances. You can search for established builders with proven track records in your area.

---

12. Who Exactly Will Be Supervising My Build on a Day-to-Day Basis?

Why this matters: The salesperson who charmed you during the pitch is rarely the person overseeing daily construction. Many builders assign a project manager or site superintendent once the contract is signed. The quality of your home depends heavily on this individual’s competence, attention to detail, and responsiveness. You need to know who this person is and how to reach them.

What a good answer looks like: The builder should name a specific project manager or superintendent and provide their direct contact information. They should explain how many projects that person is currently managing, how often they are physically on your job site (daily is ideal), and what their qualifications are. The contract should include a communication plan specifying how often you will receive progress updates, how site visits work, and the expected response time for your questions.

Red flags to watch for:

• “We will assign someone later” with no specifics
• The assigned supervisor is managing more than 5 to 7 projects simultaneously
• No direct contact information for the site supervisor
• No defined communication schedule or progress reporting process
• The builder discourages or restricts your visits to the job site during construction

The step-by-step building process involves dozens of critical inspections and decision points. Knowing who is accountable on the ground is essential to catching issues before they become expensive problems.

---

13. What Are the Termination Clauses, and What Does It Cost to Walk Away?

Why this matters: Life happens. Your financial situation may change, you may relocate for work, or the project may go so far off the rails that you want out. The termination clause defines your escape route and its cost. Equally important, it defines the builder’s right to terminate the contract and what happens to your money if they do.

What a good answer looks like: A fair contract specifies the circumstances under which either party can terminate, the notice period required (typically 10 to 30 days), and the financial consequences. If you terminate for convenience (no builder fault), you should expect to forfeit your deposit and pay for work completed to date at contract rates. If you terminate for cause (builder default, abandonment, or material breach), you should be entitled to a full refund of amounts paid for incomplete work. The builder’s right to terminate should be limited to specific, defined causes such as nonpayment by you.

Red flags to watch for:

• You forfeit all money paid regardless of the reason for termination
• The builder can terminate at will but you cannot
• No distinction between termination for cause and termination for convenience
• Penalties for termination that far exceed the builder’s actual damages
• No clause requiring the builder to return unused material allowances or prepaid amounts for unperformed work
• A “no termination” clause that locks you in regardless of circumstances

---

14. What Subcontractors Will Be Used, and Are Lien Waivers Required with Each Payment?

Why this matters: Most builders subcontract major portions of the work — plumbing, electrical, HVAC, roofing, and more. If the builder collects your payment but fails to pay their subcontractors, those subcontractors can file a mechanic’s lien against your property. This means you could be forced to pay twice for the same work or face a lien on your title that prevents you from selling or refinancing.

What a good answer looks like: The contract should require the builder to provide lien waivers (also called lien releases) from all subcontractors and material suppliers with each draw request. A lien waiver is a signed document confirming that the sub or supplier has been paid for the work covered by the current draw and waives their right to lien your property for that amount. The builder should also be willing to disclose their primary subcontractors so you can verify their licensing and reputation.

Red flags to watch for:

• No mention of lien waivers in the contract
• Builder refuses to disclose subcontractor identities
• No requirement for the builder to pay subs before or concurrent with receiving your draw payment
• History of mechanic’s liens filed against the builder’s previous projects (check court records)
• Builder uses exclusively unlicensed or uninsured subcontractors

Pro Tip: Ask your title company or attorney to conduct a lien search on the builder’s name and business entity before signing. A pattern of mechanic’s liens from unpaid subcontractors is one of the most reliable warning signs that a builder is financially unstable or dishonest. You can also research builder credentials through state licensing boards.

---

15. Does the Contract Include an Independent Inspection Clause?

Why this matters: Your right to hire independent inspectors at critical stages of construction is one of the most valuable protections you can negotiate. Municipal building inspectors check for code compliance, but their inspections are limited in scope and speed. A private inspector works for you alone and examines construction quality in far greater detail. Some builder contracts attempt to restrict or eliminate your right to independent inspection.

What a good answer looks like: The contract should explicitly grant you the right to hire third-party inspectors at any stage of construction, including pre-pour foundation, pre-close framing, rough-in mechanical, insulation, and final walkthrough. The builder should welcome independent inspection as validation of their work quality. Any contract language that limits inspection access should be removed or modified.

Red flags to watch for:

• Contract language restricting or prohibiting third-party inspections
• Requirements that you use the builder’s preferred inspector (a conflict of interest)
• Unreasonable limitations on when or how often you can inspect
• Language stating that builder’s internal quality checks “satisfy” inspection requirements
• Penalties or fees charged for scheduling independent inspections
• Restrictions on inspection findings being used in warranty or dispute claims

A builder who resists independent inspection is a builder who does not want scrutiny. Quality builders encourage it because they know their work holds up.

---

Your Pre-Signing Checklist

Before you put pen to paper, confirm that you can answer “yes” to every item on this list:

• Every verbal promise is documented in the contract or an attached addendum
• The total price is clearly defined with an itemized breakdown of inclusions and exclusions
• The change order process requires written estimates and mutual signatures before work begins
• The payment schedule is tied to verified construction milestones with retainage on the final payment
• The completion deadline includes a liquidated damages clause for builder-caused delays
• Structural warranty coverage is at least 10 years, ideally backed by a third-party provider like 2-10 HBW
• Warranty exclusions are clearly listed and maintenance requirements are documented
• The warranty is transferable to future owners
• Builder insurance is verified and you are listed as an additional insured
• The dispute resolution process is fair, tiered, and does not strip your legal rights
• Builder insolvency protections are in place (performance bond, third-party warranty survival)
• A named project manager is assigned with a defined communication plan
• Termination clauses are balanced and the financial consequences are reasonable
• Lien waivers are required from all subcontractors and suppliers with each draw
• Independent inspection rights are explicitly preserved in the contract

Print this checklist. Bring it to your signing meeting. Do not sign until every box is checked.

---

Why Third-Party Warranty Protection Deserves Your Attention

Throughout this guide, we have returned repeatedly to the value of third-party warranty programs, and for good reason. The contract you sign with your builder defines a relationship with a single company. Companies change ownership, experience financial difficulty, and occasionally close their doors. When that happens, a builder-backed warranty can become worthless overnight.

Third-party warranty providers like 2-10 Home Buyers Warranty operate independently of your builder. They are insurance-backed programs that guarantee coverage regardless of the builder’s status. The key benefits include:

• Survival beyond the builder: If your builder goes out of business, your warranty claims are still honored
• Transferability: Coverage transfers to subsequent homeowners, increasing your home’s resale value
• Independent claims process: Disputes are handled by the warranty company, not the builder you are in conflict with
• Standardized coverage: Clear, industry-recognized terms rather than custom language drafted by the builder’s attorney
• 10-year structural protection: The industry standard for structural defect coverage

The cost of third-party warranty coverage — typically $500 to $1,500 for a single-family home — is one of the highest-value investments you can make when building a new home. Compare that to the $20,000 to $100,000 cost of a major structural repair and the decision is straightforward.

Ask your builder whether they already participate in a third-party warranty program. Many reputable custom home builders enroll in these programs voluntarily because it demonstrates confidence in their work and gives buyers additional peace of mind. If your builder does not participate, you can often purchase coverage independently. For a complete breakdown of warranty types and coverage tiers, review our comprehensive guide on understanding home builder warranties.

---

Final Thoughts

Signing a contract with a home builder is not a formality. It is the legal framework that governs one of the largest investments of your life. The 15 questions in this guide are not designed to create conflict with your builder — they are designed to ensure that both parties enter the relationship with clear expectations, defined responsibilities, and fair protections.

A good builder will not be intimidated by thorough questions. They will welcome them. Builders who have been in the industry long enough know that well-informed clients make the best partners because there are fewer surprises, fewer disputes, and better outcomes for everyone.

If you are still in the process of selecting a builder, start with our guide on how to choose the right home builder and use the NearbyHomeBuilders directory to find licensed, vetted professionals in your area. If you have already chosen a builder and are preparing for the contract stage, bring this checklist, bring your attorney, and take your time.

Your future home is worth every question you ask.