The state of Arizona has various provisions and notices that must be included in any construction contract over a certain dollar amount. Not only that, but there are additional requirements for certain types of residential construction projects as well. Let’s take a quick look at the information you need to include in your next Arizona construction contract.
Arizona construction contract requirements
First and foremost, you should always get a construction contract in writing. No matter your role or project type, even if it’s not technically required. Arizona laws require a few different things to be included in a construction contract.
These requirements are meant to be included to protect consumers in the construction industry. Failure to include these any of these provisions won’t necessarily invalidate your contract. However, it can result in the suspension or revocation of your Arizona contractor’s license by the state’s Registrar of Contractors (ROC).
Required information in an Arizona construction contract
Under Ariz. Rev. Stat. §32-1158, any construction contract between a prime contractor and an owner over $1,000 in value must be in writing and contain certain information and notices. The contract must contain all of the following:
- Name of the contractor, business address, and license number
- Name and address of the owner, along with the job site address or legal property description
- Estimated date of completion
- Description of the work to be performed
- Total dollar amount to be paid to the contractor
- The amount of any advances paid or scheduled to be paid
- Total dollar amount of progress payments, and at what stage of construction they will be paid
AZ Registrar of Contractors notice
In addition to this required information, the contract must also include a brief section explaining the property owner’s ability to file a complaint with the ROC.
The following statement should be in at least 10pt bold type:
Pursuant to Arizona law we are required to inform you of your right to file a written complaint with the Registrar of Contractors for an alleged violation of the Arizona Revised Statutes Section 32-1154, Subsection A. Any complaints must be made within the applicable time period, as set forth in Section 32-1155, Subsection A. The ROC can be contacted at (602) 542-1525, or online at http://www.azroc.gov. We request that if any portion of our work is unsatisfactory, you notify us prior to filing a complaint so we can attempt to resolve any concerns.
The types of complaints that may be submitted to the AZ ROC include such violations as the abandonment of the project, noncompliance with building codes, misrepresentation, fraud, and more.
Other requirements for specific Arizona residential construction contracts
In addition to these minimum requirements for Arizona construction contracts, there are some other requirements that are narrowly tailored to certain types of residential contracts. Specifically, contracts for the installation of in-ground pools or spas, and contracts for the repair of residential property due to storm-related damages.
Swimming pool or spa construction contracts
The requirements under ARS §32-1158.01 apply to any licensed prime contractor working on the construction or installation of residential in-ground pools or spas. The contract should include:
- The option to bond the project
- A required payment schedule
- Certain notices of the purchaser’s rights
Failing to include all of the above information information can be grounds for the suspension or complete revocation of your contractor’s license.
Bonding option
The first requirement is a statement providing the purchaser with an opportunity to request payment and performance bonds. If the purchaser does decide to have the project bonded, they must do so at their own cost. Furthermore, the contractor on the project won’t be able to impose and surcharge or other types of service charges.
Payment schedule
There are also specific provisions concerning how payments are to be made on these types of contracts. This includes an initial down payment followed by three progress payments.
- 15% down payment upon execution of the contract
- 25% payment upon completion of excavation work
- 25% payment upon installation of decking materials
- Payment of remaining balance before the application of finishing interior materials or completion of prefabricated materials.
Notices of purchaser rights
Lastly, these types of Arizona construction contracts also require two types of notices (in at least 10pt font) advising the purchaser of certain rights. The first being the purchaser’s right to receive written materials concerning these requirements and the AROC procedures for complaints and disputes. The second notice is a provision advising the purchaser of their rights under the Home Solicitation and Referral Sales laws (ARS §44-15).
Residential construction contracts for storm damage repair
If the contract is for storm damage repair there may be more requirements under ARS §32-1158.02. This statute covers all repairs to a residence damaged by a “catastrophic storm” a specific, designated area. This, of course, is again in addition to the minimum contract requirements for those over $1,000.
Contract cancellation provisions
The first requirements concern the ability of the property owner to terminate the contract under certain circumstances. These provisions need to be in at least 10 pt, bold font and read:
You may cancel this contract at any time within seventy-two hours after you have been notified that your insurer has denied your claim to pay for the goods and services to be provided under this contract.
You may cancel this contract at any time, for any reason, within four business days after signing this contract.
Detailed repair estimate
In addition to the cancellation provisions, the statute also requires the contractor to attach a copy of the repair estimate as well. The estimate must contain a significant amount of detail. It should include a description of the damages, any damages excluded from the estimate, and whether the property has been inspected.
Also, it needs to provide a disclaimer stating that the contractor hasn’t made any assurances that the claimed loss will be covered by the insurance policy and the policyholder will be responsible for payment if the insurer denies coverage.
Again, contracts that lack these required provisions won’t render the contract unenforceable. But it can put your contractor license, and therefore your business, in serious jeopardy. Any contractors working on these types of projects within the state of Arizona should be sure to include this language in their standard contracts.