Arbitration - An alternative to the legal system for solving a dispute between you and a contractor. Arbitration means a third party will resolve the dispute between you and the contractor. In most cases the arbitration firm will be decided on before work begins and referenced in your contract. Bond - An amount of money that must be on file with a government agency to secure a contractor's license. The amount varies, but the bond may be used to cover a contractor's unpaid bills or disputed work. Change Order - A written document used to change the plans, specifications and/or price of the construction contract. Completion Certificate - A written document that, once signed by the homeowner, signifies that the job has been completed to the homeowner's satisfaction.

Contractor - A company or individual licensed to perform certain types of construction activities:

• A General Contractor acts as a project manager. He is both supervisor and coordinator, and responsible for the project's completion. A General Contractor may perform some of the construction himself, or may have a specialty contractor work with him to complete the project.
• A Specialty Contractor is licensed to perform a specific task, such as electrical work or asbestos abatement.
• A Subcontractor is a general or specialty contractor that works for another general contractor

Designer - A professional who can work with you before hiring a contractor to help formulate your ideas, and facilitate conveying the ideas you have for your project to your contractor.

Dispute Resolution - Any method used to resolve a conflict between you and your contractor. You and your contractor should agree on a form of dispute resolution before construction begins. The agreed-upon dispute resolution system should also be included in your contract. Dispute resolution most often utilizes arbitration or mediation to solve differences that may arise during or after your project. We advise using arbitration or mediation as a cost- effective and efficient alternative to the legal system.

Insurance - A contractor should have the following types of insurance to protect you if an accident occurs during your project:

• Workman's Compensation Insurance protects you if a worker gets hurt while working on your project.
• General Liability Insurance protects you in case a contractor or worker damages your property.
• Automobile Insurance protects you if a contractor's vehicle damages another vehicle while working on your project.

Lien - A lien is a claim against property or other assets for bills that have been left unpaid. For example, a customer who did not pay a contractor in full could have a lien placed against his property until the remaining balance is paid.

License - A license is your state government's way of certifying a contractor. In states that require a license, a contractor must apply for a license and meet specific requirements in order to operate as a legitimate contractor. Some states do not require a license. Check with your state-licensing department .

Mediation - An alternative to the legal system for solving disputes between you and your contractor. Mediation means a third party will work with you and your contractor in hopes of reaching an agreement. In most cases, a mediation agency (for example, the Better Business Bureau) will be referenced in your contract before construction begins.

Payment Schedule - Details when payment is due to your contractor and how much you will pay him. For example, payment milestones may be at the first of each month, or based upon the amount of work the contractor has completed. Often, the payment schedule will include a deposit upon signing the contract. The payment schedule, payment milestones and deposit should all be written into your contract.

Quality Standards of the Remodeling Industry - Performance level guidelines that spell out tolerances, specifications and workmanship criteria a remodeling project must meet.

Permit - Government authorization to perform a building process. There are several types of permits. Be sure that the contractor agrees (in writing within your contract) to buy applicable permits:

• A building permit allows a contractor to build a new structure or modify an already existing structure.
• An electrical permit is a separate permit required for most electrical work.
• A grading permit is required to change the contour of the land.
• A plumbing permit is required for new plumbing and modifications to existing plumbing systems.
• A septic permit is authorized by the health department to build or modify a septic system.

Right of Rescission - Allows you to void a contract within three business days of signing it. Regulated by the Federal Trade Commission, this clause protects consumers who have changed their minds since signing a contract.

Specifications - A comprehensive list of materials, methods, model numbers, colors, allowances, measurements and all other details concerning a construction or remodeling project. Specifications should be written into your contract to clearly define the details of your project.

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