Exhibit 7.13
THIS FORM IS A SAMPLE AGREEMENT AND MAY NOT BE APPLICABLE TO
YOUR SPECIFIC SITUATION. IT IS DESIGNED AS A STARTING POINT FOR
HOMEOWNER REHABILITATION AND NEW HOME CONSTRUCTION PROJECTS.
YOU ARE ENCOURAGED TO SEEK ADVICE FROM YOUR LEGAL COUNSEL TO
DETERMINE THE SUFFICIENCY OF THIS FORM FOR YOUR PURPOSE.
CONSTRUCTION AGREEMENT
THIS CONSTRUCTION AGREEMENT (“Agreement”) is entered into this _____ day of
________, 20__, by and between:
_________________________________________________________________ (“Owner”) and
___________________________________________________________________ (“Builder”).
WITNESSETH
WHEREAS, Owner has received a commitment of funding from
_______________________________ (“Recipient”) under the federal HOME Investment
Partnerships Program (“HOME Program”) administered by Kentucky Housing Corporation
(“KHC”) for the purpose of new construction/rehabilitation (choose one) of property located at
________________________________________________, Kentucky in keeping with the
drawings and specifications or work write-up cumulatively called the “Plans” prepared by
_________________ and provided by the Owner attached to and made a part of this Agreement;
and
WHEREAS, Builder desires to construct/rehabilitate (choose one) the improvements
as described in the Plans.
NOW, THEREFORE in consideration of the sum of money described below and for
other good and valuable consideration, the parties agree as follows:
1. CONSIDERATION. Owner hereby agrees to pay the Builder the sum of
_______________________________________ Dollars ($___________) for the
performance of this Agreement, subject to any additions and deductions and the
provisions of this Agreement, in the following manner:
A. New Construction: payment will be made in three draws: (i) when the project is under
roof, (ii) upon completion of the installation of insulation and the taping of drywall and (iii) upon
completion of construction.
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Exhibit 7.13
B. Rehabilitation: payment will be made in three equal draws during the term of
construction with the final payment upon project completion.
All payments from Recipient to Builder under this agreement shall be made after
inspection of the work completed and approved by Owner and Recipient.
2. FAMILIARITY WITH SITE. The Builder has visited the property and is
familiar with the local conditions under which the work is to be performed.
3. LABOR, MATERIALS AND PERMITS. The Builder agrees to provide all of
the material and labor required for the timely performance of duties detailed in the
Plans including equipment, tools, water, heat, utilities and services necessary for
the proper completion of the work. Builder also agrees to obtain and pay for all
building permits and other permits, licenses and inspections necessary for
completion of the Plans. Unless otherwise specified, all materials shall be new
and of good quality. In prosecution of the Plans, Builder agrees to employ a
sufficient number of workers skilled in their trades to suitably perform the work.
4. WARRANTY OF WORKMANSHIP. All work will be of good quality, free
from defects and faults, in accordance with the Plans which have been approved
by Owner and Builder and free from all materialmen’s liens, mechanics liens and
claims. All work not conforming to this requirement will be considered defective.
Builder agrees to re-execute any work which does not conform to the Plans,
warrants the work performed, and agrees to remedy any defects resulting from
faulty materials or workmanship which shall become evident during a period of
one (1) year after completion of the work and final payment under this
Agreement. The provisions of this section apply to work performed by
subcontractors as well as work performed by direct employees of the Builder.
Builder agrees to provide a one-year written warranty to Owner. Builder agrees
to provide original manufacturers’ warranties to Owner for all applicable
materials, fixtures and appliances.
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Exhibit 7.13
5. BUILDING SITE. The Builder will, at all times and at his/her expense, keep the
building site free from accumulation of waste, rubbish and debris associated with
construction activities.
6. COMMENCEMENT AND COMPLETION OF WORK. The Builder shall
commence construction within 14 days of issuance of a Notice to Proceed from
the Owner. The Builder agrees that the various portions of the work shall be
completed on or before the issuance of the Certificate of Occupancy/Substantial
Completion (not to exceed 180 days).
7. CONSTRUCTION DELAYS. In the event the Builder is delayed in the
construction work by acts of God, fire, flood or any other unavoidable casualties;
or by labor strikes, or by neglect of the Owner; the time for completion of the
work shall be extended for the same period as the delay caused by any of the
foregoing reasons. In the event the construction work is delayed due to the
neglect of the Builder, the Builder agrees to pay the Owner the sum of $_______
per __________ (day/week) as liquidated damages until the time as the work is
completed.
8. INSPECTION OF WORK. The Builder will permit and facilitate inspection of
the work by Owner and Recipient and its agents and public authorities at all
times.
9. CHANGES IN THE WORK. All changes and deviations in the construction
work ordered by the Owner must be in writing and approved by Recipient, the
contract sum being increased or decreased accordingly by the Builder. Any
claims for increases in the cost of the work must be presented by the Builder to
the Owner and Recipient in writing, and written approval of the Owner and
Recipient must be obtained by the Builder before proceeding with the ordered
change or revision. No change order will be approved until sufficient funds are
made available to Owner by Recipient or by Owner directly to cover the costs of
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Exhibit 7.13
the change order. No change order will be approved unless its sole purpose is to
necessitate conformance of the project with applicable codes.
10. INSURANCE. The Builder will purchase and maintain adequate workers’
compensation insurance, builder’s risk insurance and liability insurance and will
provide copies of the insurance policies to the Owner and the Recipient. To the
fullest extent permitted by law, Builder will indemnify and hold Owner harmless
against any claims, damages, loss and expenses, arising out of or resulting from
the construction work or Builder’s acts or neglect.
11. OWNER’S RIGHT TO TERMINATE AGREEMENT. Should the Builder
neglect to perform its duties under this Agreement properly, or fail to perform any
provision of this Agreement, Owner, after seven (7) days’ written notice to the
Builder and with the approval of the Recipient, may, without prejudice to any
other remedy he/she may have, correct any deficiencies and may deduct the
associated cost from the payment due to the Builder, or at Owner’s option, may
terminate this Agreement and take possession of all materials and appliances and
finish the work for code compliance as the Owner sees fit. If the unpaid balance
payable under this Agreement exceeds the expense of finishing the work, the
excess will be paid to the Builder, but if the expense exceeds the unpaid balance,
the Builder will refund the difference to the Owner.
12. PAYMENT. Payments will be made as provided in this Agreement. The making
and acceptance of the final payment will constitute a waiver of all claims by
Owner, other than those arising from (a) unsettled liens or from faulty work
appearing within 12 months of the completion of construction as provided for
under Section 4 of this Agreement; (b) claims by the Builder except any
previously made and unsettled. Payments otherwise due may be withheld due to
defective work which has not been remedied, liens filed, damage by the Builder to
others which have not been settled, or failure to make payments properly to
subcontractors or for material or labor.
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Exhibit 7.13
13. RECORD RETENTION. For a period of not less than five (5) years after
delivery of the final payment to Builder, Builder will maintain all files and
records pertaining to its performance under this Agreement. Due to use of federal
funding, Kentucky Housing Corporation (KHC) or the Comptroller General of the
United States or an authorized representative of either of one or both of them may
inspect, audit and copy, at their expense, any of Builder’s records pertaining to
Builder’s performance under this Agreement.
14. COMPLIANCE. Builder will comply with any and all applicable state, federal
and local laws, ordinances, regulations and codes.
15. SEPARATE CONTRACTS. Owner waives the right to perform work either
with his/her own work forces or to award contracts to perform other work in
connection with the project described in this Agreement without consent of
Builder and Recipient.
16. MISCELLANEOUS.
(a) There will be no assignment of the rights and obligations of the Builder
under this Agreement without the prior written approval of Owner and
Recipient.
(b) No variance or modification of this Agreement will be valid and
enforceable, except by supplemental agreement in writing, executed and
approved in the same manner as this Agreement.
(c) This Agreement is made under and is governed by the laws of the
Commonwealth of Kentucky, unless otherwise superceded by federal law.
(d) The invalidity or unenforceability of a particular provision of this
Agreement will not affect the other provisions of this Agreement, and this
Agreement will be construed in all respects as if any invalid or
unenforceable provisions were omitted.
(e) All claims and disputes between Owner and Builder will be decided by
arbitration held at the offices of Recipient, or at another place as the
arbitrators may mutually determine, in accordance with the Construction
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Exhibit 7.13
Industry Arbitration Rules of the American Arbitration Association then in
effect.
(f) Owner has authorized Recipient to hold funding and to make the payments
provided for in this Agreement directly to the Builder on behalf of the Owner upon receipt of
written approval of the Owner.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
____________________________________ ______________________________
Owner Builder Company Name
____________________________________ By: __________________________
Owner
Title: _________________________
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