Building your dream home is exciting — but let’s be honest, the paperwork can be… less so. Between blueprints, budgets, and all the decisions about tile grout and cabinet finishes, the construction contract can feel like a dense wall of legalese you’d rather ignore. Don’t.

That contract? It’s your safety net. It’s the thing that protects your vision, your investment, and your peace of mind. Whether you’re working with a luxury builder like Villanueva Construction or navigating the custom home process for the first time, understanding the basics of your Texas construction contract is key to a smooth, stress-free experience.

Let’s break it down, clause by clause, so you know exactly what to look for — and what to avoid.

Why Construction Contracts Matter

A good construction contract is more than a formality. It’s a detailed agreement between you and your builder that outlines expectations, timelines, responsibilities, costs, and legal protections for both parties.

Think of it as the instruction manual for your homebuilding journey. Without it, misunderstandings are just waiting to happen and in construction, misunderstandings can get expensive.

The Essentials: What Every Texas Construction Contract Should Include

Construction contracts might seem like dense legal documents, but they’re really just tools to keep your project running smoothly. At their core, these contracts spell out who’s doing what, when they’ll do it, how much it will cost, and what happens if things don’t go according to plan.

Think of them as your project’s instruction manual combined with a safety net. They help both you and your builder avoid confusion, stay accountable, and have a clear path forward if challenges arise.

In this section, we’ll walk through the most important parts of a construction contract — the stuff you absolutely want to understand and have clearly documented before anyone starts pouring concrete or swinging a hammer.

1. Scope of Work

This is the who-does-what-and-how section. It should clearly outline:

• What’s being built (home size, materials, design specifics)
• Who’s responsible for each part of the job (builder, subcontractors, suppliers)
• What’s included — and what’s not

Why it matters: Without a defined scope, it’s easy for expectations to get misaligned. For example, if you think custom cabinetry is included but the builder assumed standard options, guess who’s on the hook for the upgrade?

2. Timeline and Milestones

Your contract should lay out a realistic construction schedule, including:

• Estimated start and completion dates
• Key project milestones (foundation, framing, roofing, etc.)
• Procedures for handling delays (weather, material shortages, permit holdups)

Pro tip: Make sure the contract includes language about how and when you’ll be updated if things shift — because in construction, they often do.

3. Cost and Payment Schedule

No surprises here: you want to know exactly how much your home will cost and when payments are due. Look for:

• A detailed breakdown of costs (materials, labor, fees)
• Allowances for items not yet finalized (like tile, lighting fixtures, or appliances)
• A clear payment schedule tied to milestones — not arbitrary dates

Watch out for: Vague language like “subject to change.” If the pricing isn’t fixed, make sure the contract spells out when and how cost changes will be communicated and approved.

4. Change Orders

You’ll likely change your mind about something during construction. (Trust us, it happens.) Change orders are formal amendments to the contract that document those decisions.

• The contract should explain:
• How change requests are submitted
• Who approves them (that’s you!)
• How they affect costs and timelines

Tip: Always get change orders in writing. A verbal “sure, we can do that” won’t hold up if there’s a dispute later.

5. Warranties and Guarantees

A reputable builder like Villanueva offers warranties for workmanship, materials, and structural elements. Your contract should include:

What’s covered

• For how long
• What’s required to maintain the warranty

Why it matters: If something goes wrong six months after move-in, you need to know what’s your responsibility and what’s not.

6. Insurance and Liability

Make sure the builder carries:

• General liability insurance
• Workers’ compensation
• Builder’s risk insurance

Your role: Check whether you need to carry homeowner’s insurance during the build — especially if you’re financing the construction.

7. Dispute Resolution

Even with the best intentions, disputes can happen. Your contract should explain:

• How disputes will be resolved (mediation? arbitration? court?)
• Where disputes will be resolved (what jurisdiction)
• Who covers legal fees

The goal: Avoid messy, expensive legal battles. A well-defined resolution clause can save everyone time and stress.

Types of Construction Contracts

Before you sign anything, it helps to understand the various types of construction contracts available. Each has its own strengths and drawbacks, and the best one for your project depends on your budget, timeline, and how flexible you want the agreement to be.

Contract Type	Description	Best For	Pros	Cons
Fixed-Price (Lump Sum)	A set total price for the entire project.	Well-defined projects with clear plans	Budget certainty	Less flexible if changes occur
Cost-Plus	You cover actual costs plus a fee or percentage.	Custom or evolving-scope builds	Flexible and adaptable	Harder to predict total cost
Time & Materials (T&M)	Pay for labor/time and materials used.	Small or unclear-scope projects	Simple and transparent billing	Can become expensive quickly
Unit Price	Work is divided into units, each with a set price.	Projects with repetitive, measurable tasks	Easy to track per-unit costs	Total cost may vary significantly

1. Fixed-Price (Lump Sum) Contract

This is the most straightforward type: the builder agrees to complete the entire project for a set price. It’s great for budget certainty, but less flexible if you make changes along the way.

Best for: Well-defined projects with a clear scope.

2. Cost-Plus Contract

You agree to pay for the actual costs of construction (materials, labor, etc.) plus a fixed fee or percentage for the contractor’s overhead and profit. These contracts are flexible but require trust and good documentation.

Best for: Complex or custom builds with evolving plans.

3. Time and Materials (T&M) Contract

You pay based on the time spent and materials used. Rates for labor and materials are typically specified in advance.

Best for: Small projects or jobs where scope is unclear upfront.

4. Unit Price Contract

Work is divided into units (like square feet or linear feet), each priced separately. You pay for the actual quantity of work completed.

Best for: Projects with repetitive tasks and measurable units.

Understanding which contract type you’re signing — and why — is essential. It impacts everything from payment structure to how changes are handled down the line.

Clauses to Prioritize (a.k.a. Read These Twice)

Here’s your shortlist of contract elements you should never gloss over:

• Termination Clause: What happens if you or the builder want out of the agreement?
• Force Majeure: Covers what happens in uncontrollable events — like extreme weather or supply chain shutdowns.
• Lien Waivers: Protect you from contractors or suppliers placing liens on your property if they aren’t paid.
• Inspection and Walkthroughs: When can you visit the site? How are issues spotted and resolved?
• Final Acceptance: What defines project completion? What’s the process for your final sign-off?

Common Pitfalls to Avoid in you Construction Contract

Even with the best contract, construction projects can go sideways if you’re not careful. Here are some of the most common mistakes homeowners make — and how to sidestep them:

1. Not Reading the Contract Thoroughly

It sounds obvious, but too many homeowners skim the contract or rely on verbal promises instead. Read every word. Highlight questions. Ask for clarification. If something doesn’t feel clear, it probably isn’t.

2. Skipping Legal Review

If your build is large or complex, or if the contract is written by the contractor, it’s wise to have a construction attorney look it over. The cost of review is minimal compared to the expense of a legal dispute down the road.

3. Failing to Document Changes

It’s tempting to make small changes on the fly — a different backsplash here, a new window there — but even minor modifications can affect budget and timeline. Always use written change orders.

4. Assuming “Standard” Terms Are in Your Favor
Contractors often use templates that prioritize their interests. Make sure the contract is balanced. You have the right to negotiate — especially around payment structure, delay clauses, and warranties.

5. Leaving Allowances Too Vague

If your contract includes allowances for fixtures, flooring, or finishes, ensure the dollar amounts are realistic. Otherwise, you may find yourself blowing the budget on upgrades you thought were included.

Avoiding these pitfalls doesn’t require legal expertise — just a bit of diligence and a willingness to speak up. A construction contract should empower you, not confuse you.

How Villanueva Homes Makes Construction Contracts Less Intimidating

At Villanueva Construction, contracts aren’t just paperwork — they’re part of the promise to deliver a home you love, with no surprises along the way.

• Their transparent process includes:
• Step-by-step guidance on each contract section
• Upfront discussions about cost, scope, and timeline
• Open communication throughout the build

Because for them, building your home isn’t just about the structure — it’s about trust, clarity, and lasting relationships.

Protect Yourself by Knowing What’s Inside the Fine Print

Reading a construction contract might not be as exciting as choosing countertops or designing your dream kitchen. But it’s one of the most important steps in your custom home journey. With a little knowledge (and a builder you trust), you can feel confident signing on the dotted line — and even more excited watching your vision come to life.

Need help getting started? Villanueva Homes is here to walk you through the entire process, contract and all. Because peace of mind is just as important as a beautiful floor plan.

Please note that the information in this article is not legal advice. Consult with an attorney when dealing with contracts.