The Allen County Indiana CONSTRUCTION CONTRACT Home Builders Association

Transcription

1 The Allen County Indiana CONSTRUCTION CONTRACT Home Builders Association Bar Association, Inc. of Fort Wayne, Inc., as Builder, and, as Buyer, make this Construction Contract ( Contract ) this day of, Builder will construct for Buyer the Work at (address) on real estate in County, Indiana, legally described as: The name and address of the owner of the Real Estate is TERMS The following terms apply to this Contract: A. $ Contract Price. (This figure is only for the cost of the work. For purchase price of Real Estate, see Term I.) B. Cost-plus (as an alternative to Contract Price). Both parties are to initial here, and then make arrangements (by means of an addendum or exhibit) according to Subsection 1:03; C. Schedule of Payments of Contract Price [Mark each box that applies]: $, down payment when this Contract becomes effective; $, at completion of grading and excavation, footing and foundation, basement floor or slab, dampproofing and backfill, garage floor and drainage; and after the as-built certificate of Subsection has been issued; $, at completion of enclosing building (including roof, windows and exterior doors); $, at (describe) ; $, at completion of interior walls (including rough fireplace, installing furnace, rough plumbing, heating, wiring, insulation and taped and sanded drywall); $, at completion of interior trim and exterior siding; $, at (describe) ; $, at completion of Work (subject to Section 2). D. Yes No Does Buyer, owning the Real Estate, require financing? If Yes, complete Approved Form entitled Buyer s Financial Arrangements. E. Completion Date:,. F. Warranty, the kind that is to apply [mark one]: (1) Statutory Warranties and Disclaimer of Implied Warranties; (2) Express Warranty; (3) No Express Warranty. See Section 5, Warranties for meaning of warranty and for requirements. G. Yes No No-Lien Agreement: If Yes, comply with Section 7, No-Lien Agreement. NOTE: If Builder owns the Real Estate and a No-Lien Agreement is to be signed, Builder must comply with Subsection H. Liability Insurance (minimums): $500,000 per occurrence; $1,000,000 general aggregate; property damage: Contract Price. See Subsection 3.01 (H). I. $ Purchase Price of Real Estate (if Builder is owner). Unless the parties agree otherwise, such price is payable when title is transferred. J. If Real Estate is owned by a person other than Buyer, see Subsection K. Applicable sections of this Contract also affect the relationship between the parties and are as effective as though set forth above their signature. If the parties want other provisions to apply to this Contract, those provisions should be in writing, signed by each party, and attached to this Contract, thus constituting an exhibit or an addendum to this Contract. L. Plans and specifications for the Work are an important part of the Contract Documents. The parties must agree upon the plans and specifications and sign or initial them before this Contract becomes effective. M. Builder is/is not [strike one] a licensed broker/salesperson under the laws of the state of Indiana. N. See Subsection APPROVED FORMS 1. Each Approved Form, properly filled in and signed by the parties to it, will amplify this Contract and become a part of it. A form need not be physically attached to this Contract, though it may be. Each of the following forms is an Approved Form. As a way of showing which of these forms have been signed simultaneously with the signing of this Contract, one of the parties (preferably Builder) should initial the list below: Agreement to Purchase Unimproved Real Estate [see Subsection 10.02] Statutory Warranties and Disclaimer of Implied Warranties Buyer s Financial Arrangements [see Term D] [see Subsection 5.01] Express Warranty [see Subsection 5.04] Notice of Waiver of Implied Warranties [see Subsection 5.01] No-Lien Agreement [see Section 7] 2. Each of the following forms is also an Approved Form: Change Order [see Subsection 1.02]; Completion Affidavit and Agreement [see Subsection 2.04(D); 2.05(B)]; Escrow Agreement [see Subsection 2.04(D); 2.05(C) and (D)]; Builder s Notice [see Escrow Agreement]; and Inspector s Report [see Escrow Agreement]. Some or all of these forms may also be used by the parties. By their nature, such forms require that they be signed after this Contract is signed. DEFINITIONS The following terms are defined in Section 9: Approved Form; Arbitration Act; Contract Documents; Dispute Resolution; Escrow Fund; Evidence of Title; New Home Warranty Act; Real Estate; Survey; Work; Worker s Compensation Act; Worker s Compensation Board. SIGNATURES: BUILDER: BUYER: (Name of Builder) (Signature) By: (Signature) (Printed/Typed Name) _ (Printed/Typed Name and Position) (Signature) By: (Signature) (Printed/Typed Name) _ Buyer s Address: (Printed/Typed Name and Position) Builder s Address: _ CAUTION: When properly signed, this Contract is a legal and binding _ agreement. Legal review may be advisable.

2 Section 1. The Work Contract Price Builder shall execute the entire Work in accordance with Contract Documents, with protective restrictions, covenants and limitations applicable to the Real Estate, and with applicable laws and building rules and requirements of government authorities having jurisdiction, Builder being able to make, however, such changes, deviations or omissions as may be required, in the sole opinion of Builder, to comply with such protective restrictions, covenants and limitations and such laws, rules and requirements, and to meet suggestions or design changes made by the architect or required by particular conditions of the Work, including easements The price for the Work is either: (A) the Contract Price as stated in Term A, as it may be increased or decreased by Change Order(s) or any other change order(s) agreeable to the parties, or by any other charge Builder is authorized to make under this Contract; or (B) the total of charges computed on a cost-plus basis, if Term B applies If this Contract is upon a cost-plus basis, the parties are to make their own arrangements, evidenced by an addendum or exhibit to this Contract, as to the composition of costs, expenses, percentage of add-on and any other factor(s) to affect the charge of Builder, and the payment of Builder, for the Work. The parties may provide for a schedule of payments tied to cost-plus. Reference in this Contract to Contract Price includes a payment on a cost-plus basis After this Contract is signed, the Work may not be altered, added to, or deleted and the Contract Price may not be adjusted except by a Change Order (an Approved Form) or other written change order signed by the parties, and not by oral agreement, which appropriately details the scope of the Work, rights or obligations and the cost thereof. Section 2. Manner of Payment Buyer shall make scheduled payments on the Contract Price as required by the Schedule of Payments in Term C and in accord with Subsection If Buyer fails to do so, Builder may cease work until a payment due has been made. Builder may also have any remedy granted by Section 6 upon default by Buyer. Each overdue payment will bear interest at the rate of 18% per annum from the date payment was due until paid To obligate Buyer to make scheduled payments (except the last), Builder must send Buyer an invoice describing the Work for which payment is to be made and the amount to be paid (not to exceed, however, the amount of the scheduled payment). Within 5 days after the invoice was sent, Buyer is to inspect such Work, or cause it to be inspected. If the inspection shows that Builder has performed the Work stated on the invoice, and in a manner in accord with Contract Documents, Buyer shall pay the amount on the invoice within 5 days after the inspection. As to any difference between the parties, Dispute Resolution (see Section 6) applies. If Buyer fails to have a timely inspection, Buyer shall be deemed to have waived inspection, and shall pay the amount on the invoice within 5 days after expiration of the 5-day period Buyer had to inspect If a mortgage lender requires and the parties agree, the mortgage lender may vary the amount paid on any invoice, provided that the aggregate amount of payments is not affected For payment of the last scheduled payment (or the entire Contract Price if scheduled payments were not provided for), all the following events must occur: (A) Builder obtains, at its expense, certificates of occupancy (or similar permits) issued by the appropriate government agencies. (B) Builder gives Buyer notice that the Work is substantially completed in accordance with Contract Documents, and is ready for Buyer s occupancy and inspection by Buyer or Buyer s Designee. (C) Within 5 days of the date Builder gives such notice, the parties shall attempt to agree upon: (1) a punch list (approved form) of items (if any) that are: (a) considered to be minor deficiencies in the Work by the standards of construction existing in the community where the Work is located; and (b) not to be included in an Escrow Agreement; (2) the date(s) by which Builder must complete, repair, or replace the item(s) on any such punch list; and (3) items (if any) to be included in an Escrow Agreement (see Subsection 2.06). If the parties are unable to so agree, either may seek Dispute Resolution (to resolve any differences), (D) If a punch list is made as provided in Subsection 2.04(C), Builder shall complete or fix each item on it by the date applicable to each item. If any item cannot be so completed or fixed, an event of default by Builder shall be deemed to have occurred. (E) Within 10 days after a punch list is made (whether by agreement or through Dispute Resolution), or if there is no such punch list, within 10 days after Builder has given the notice of Subsection 2.04(B), the parties shall have a closing for: (1) delivery of Completion Affidavit and Agreement, appropriately completed; (2) making of the last scheduled payment (or the entire Contract Price if scheduled payments were not provided for) LESS the Escrow Fund under an Escrow Agreement; (3) signing of an Escrow Agreement (if necessary) by the proper parties; (4) Builder s delivery and Buyer s acceptance of possession of the Work except for items in an Escrow Agreement; and (5) such other matters as are necessary or proper to conclude the transaction between the parties ( Closing ). Failure to complete items on the punch list, by the time of closing, is not cause to defer the closing or to impose any conditions upon it. (F) A closing under Subsection 2.04(E) shall be held after one of the following events occurs: (1) Builder gives notice under Subsection 2.04(B), if there is no punch list; (2) Builder completes or fixes all items on the punch list; (3) Builder gives notice of escrow under Subsection 2.05; or (4) Dispute Resolution [if required under Subsection 6.11] is concluded As an alternative to the procedure in Subsection 2.04, Builder may offer possession of the Work and Buyer may accept it before the Work is substantially completed and ready for Buyer s occupancy, upon the following conditions: (A) Builder obtains at its expense certificates of occupancy (or similar permits) issued by the appropriate government agencies. (B) The parties complete a Completion Affidavit and Agreement (the document to be effective only to the time Builder gives possession). (C) On the date Builder gives possession, Buyer makes the last scheduled payment (or the entire Contract Price if scheduled payments were not provided for), LESS the Escrow Fund under an Escrow Agreement. (D) The proper parties sign an Escrow Agreement (if necessary). 2

3 2.06 An Escrow Agreement may list terms (but not any on the punch list) not completed at time of closing, or items (but not any on the punch list) to be completed or repaired after closing, and provide an Escrow Fund for such items. The Escrow Fund is an estimate, made by Builder, of the reasonable cost for each item. If Buyer does not agree with any such estimate, Builder shall, at its expense, give Buyer a written report, prepared by an independent inspector, estimating the reasonable cost of each item listed in the Escrow Agreement. If Builder s estimate is 150% of the independent inspector s estimate, Buyer must accept Builder s estimate. If Builder s estimate is 150% of the independent inspector s estimate, Builder s estimate will be fixed at a figure that is 150% of the independent inspector s estimate, and both parties must accept that figure If the amount to be placed in the Escrow Fund meets the requirements of Subsection 2.06, Buyer will be obligated to consent to an Escrow Fund to cover items (but not any on the punch list) that Builder, through no fault of its own, has not been able to perform or complete by reason of circumstances beyond Builder s control (examples of such items being landscaping, concrete work, air conditioning and yard light; and examples of such circumstances being acts of God, national emergency, weather and scarcity or unavailability of supplies, material, or equipment) Buyer is entitled to possession of the Work, and Builder shall deliver it, when the Contract Price has been paid in full, less any amount escrowed. By paying the Contract Price, by entering into an Escrow Agreement, or by accepting possession, Buyer does not waive defects in Builder s performance, whether in workmanship or materials or otherwise. Whatever obligation Builder had with respect to them survives payment, escrow or acceptance. Section 3. Affirmative Covenants of Builder and Indiana Quality Assurance Builder Standards Builder covenants to: (A) begin, pursue and complete the Work in good and workmanlike manner and in substantial conformity with Contract Documents (especially the plans and specifications) and have it ready for occupancy by the Completion Date, broom clean (meaning that surplus or waste materials, rubbish, equipment, scaffolding and other things used during construction will have been removed); provided, however, that a delay in construction caused by an act or neglect of Buyer, or by change in the Work, or by strike, lockout, fire, unusual delay in transportation, unavoidable casualty, or any cause beyond Builder s control shall extend the Completion Date reasonably; (B) pay, when due, for all material equipment and machinery furnished, and for all wages and compensation due or to become due to every subcontractor, mechanic, journeyman, laborer or person performing labor, for the Work; and keep the Real Estate and the Work free from liens for such items and labor used; (C) indemnify Buyer against, and hold Buyer harmless from, any claim, action, loss, damage, liability, cost or expense (include attorney s fees) resulting from Builder s failure to pay as required by Subsection 3.01(B); and to keep the Real Estate and the Work free from liens referred to in Subsection 3.01(B); or as an alternative, provide a bond, issued by a financially sound insurance company in the business of issuing bonds, guaranteeing the release or discharge of liens referred to in Subsection 3.01(B); (D) insure the payment of compensation to its employees and their dependents as provided in the Worker s Compensation Act, OR procure from the Worker s Compensation Board a certificate authorizing Builder to carry the risk (imposed by that act) without insurance; (E) keep in force the insurance or the certificate described in the preceding covenant; (F) give Buyer, before constructing begins, a certificate from the Worker s Compensation Board showing that Builder has complied with IC , and of the Worker s Compensation Act, that certificate being pursuant to and for the purpose of IC ; (G) indemnify Buyer against, and hold Buyer harmless from, any claim, action, loss, damage, liability, cost, or expense (including attorney s fees) incurred by Buyer for failure of Builder or any of Builder s employees, agents or subcontractors to comply with the Worker s Compensation Act, or any other provision of this Contract requiring of Builder any insurance or certificate referred to in this Section 3; (H) have insurance (and pay its premiums) against liability both for injury to or death of any person not covered by the Worker s Compensation Act, and for damage to or destruction of property, in any case arising from or during the performance of the Work, the insurance to be in amounts not less than the minimums for liability insurance stated in Term H, or for such greater amounts as the parties may agree to in writing; (I) give Buyer, before construction begins, a certificate or memorandum of insurance confirming that a policy for insurance complying with Subsection 3.01 (H) is in effect, and that it contains a provision that coverage will not be cancelled until at least 15 days prior written notice has been given to Buyer; (J) bear, until Buyer accepts possession of the Work, the risks of loss arising from damage to or loss of the Work; (K) have, and pay premiums for, insurance against loss of or damage to the Work by reason of fire, casualties included within extended coverage, vandalism, malicious mischief, and such other causes as Buyer requests in writing, provided coverage is available, Builder being entitled to add the premiums to the Contract Price; (L) apply the proceeds of such casualty insurance toward rebuilding or reconstructing the Work, with any excess applied toward reduction of the Contract Price; (M) obtain and pay for all fees for building and occupancy permits, utility connections and the like; and (N) comply with Subsection 10.05, requiring staking of and placement of the foundation and issuing of an as-built certificate The Builder further covenants that the Work shall be constructed to comply with the Builder Responsibilities as set forth in the Indiana Quality Assurance Builder Standards (current Edition) ( Standards ) subject to the terms and conditions of the Standards. The Standards shall be deemed a part of this Contract. A copy of the current edition of the Standards shall be furnished to Buyer. With respect to any Builder who participates in an additional purchased home warranty program, if there is any inconsistency between the Standards and the terms and provisions of any of the documents comprising such warranty insurance program, then the terms and provisions of the documents comprising such warranty insurance program shall govern, and shall apply to the extent of any such inconsistency. Section 4. Buyer s Covenants Buyer covenants that: (A) Buyer will pay Builder the Contract Price in the manner provided in this Contract. (B) Buyer knows and consents that during construction certain minor changes, deviations, or omissions may be necessary, which Buyer authorizes Builder to make, but without adjustment in the Contract Price, unless adjustment is agreed upon in writing by Buyer and Builder. (C) Buyer is aware that the Work may differ somewhat from the dimensions shown on Contract Documents or from a model, a drawing, or other document describing or showing the Work; and that any statement as to specific square footage or other dimension of the Work is only a reasonable approximation. (D) Buyer recognizes that appliances, equipment, decoration and similar items to be installed or used in the Work may not conform to samples Builder may have shown Buyer, and Buyer authorizes Builder to make changes in or substitutions of such items if their quality is equal to, or greater than, the quality of samples shown or items specified in any Contract Document. 3

4 Section 5. Warranties (A) To disclaim implied warranties, Builder must: (1) complete the Approved Form: Statutory Warranties and Disclaimer of Implied Warranties (which contains warranties required by the New Home Warranty Act) IC , and comply with other requirements of that statute, (2) obtain Buyer s signature(s) to that form, and (3) have Buyer, as an initial home buyer, acknowledge the disclaimer of implied warranties by signing the Approved Form: Notice of Waiver of Implied Warranties and no other form for that purpose. (B) The warranties contained in the disclaimer form are here expressly provided for as though they were here set forth If Buyer brings an action against Builder for breach of a statutory warranty given in the Approved Form: Statutory Warranties and Disclaimer of Implied Warranties, this Subsection 5.02 provides for inclusion in an award granted Buyer, of Buyer s attorney s fees as allowed in the New Home Warranty Act Builder s disclaimer of implied warranties has been done pursuant to the New Home Warranty Act. The effectiveness of the disclaimer depends upon compliance with that statute and upon any applicable court decision(s) If Builder is to give express warranties [other than the Statutory Warranties see Subsection 5.01(A)], they may be contained in Approved Form: Express Warranty, or in Builder s own form, in each case to be prepared by Builder and to be signed by both parties. Buyer s signature is for the purpose of acknowledging a reading and an understanding of the warranties and agreeing to them No Express Warranty as used in Term F(3), means that Builder gives no express warranty as to the Work. If Buyer is to have the Work done under no express warranty from Builder, Buyer is to evidence his acceptance by signing a separate document, to be prepared by Builder, providing that: Buyer acknowledges and he understands Builder has given no express warranty as to the Work, and Buyer is willing to have the Work done under the Contract on that basis Implied warranties may apply to the Work even though Builder has given the warranties described in Subsection 5.04, or has undertaken the Work with No Express Warranty A warranty given under this Contract does not cover any appliances, equipment, or other items that are consumer products for purposes of the Magnuson- Moss Warranty Act (15 U.S.C. Sec 2301 et.seq.) To the extent possible Builder assigns to Buyer the manufacturer s warranties on such consumer products included in the Work. Builder gives no warranties relating to them, and makes no representations regarding the assignabilityof sale warranties. Section 6. Resolution of Disputes on Warranties; Events of Default; Default; Remedies; Dispute Resolution Breach of Warranty in Disclaimer of Implied Warranty. If Buyer claims a breach of a statutory warranty given in connection with the disclaimer of implied warranties under the New Home Warranty Act (in this Section 6 also the statute ), and a process for settlement of disputes as to construction or statutory warranties is available, Buyer may submit the claim to that process, and Builder shall then participate in that process. A determination, decision or award resulting from that process shall be binding upon any party only as, or to the extent that, the rules applicable under that process provide. In any event Buyer has an action, at law or in equity, with attorney fees, as provided by IC Other Breaches of Warranty. If such a process for settlement of disputes is not available, or if Buyer claims a breach of any other warranty given by Builder or implied as to the Work, Dispute Resolution applies Default by Builder. (A) An event of default by Builder will have occurred if Builder: (1) fails to perform the Work as required by Subsection 1.01; (2) fails or refuses, repeatedly, to supply enough properly skilled workers or proper materials to perform the Work in accordance with Contract Documents; or (3) fails or refuses to perform any of its covenants. (B) A claimed event of default can become a default, only as determined by the following procedure: (1) Buyer must give Builder notice describing the event in reasonable detail ( Buyer s Notice of Default ). (2) Builder then may dispute, in writing provided to Buyer, whether an event of default has occurred. If the parties cannot resolve the question within 15 days after Buyer s Notice of Default is given, the matter must be submitted to Dispute Resolution. That process determines solely whether the claimed event of default has become a default. (3) As an alternative, Builder may remedy the claimed event of default within 15 days after Buyer s Notice of Default is given. Any question concerning Builder s remedying the event of default shall be resolved either by the parties themselves or by Dispute Resolution. If Builder chooses to remedy but does not do so (whether within the 15-day period or as determined in Dispute Resolution), the claimed event of default will become a default at the expiration of the appropriate time period Remedies upon Builder s Default. (A) Once a default of Builder is determined to exist, Buyer may: (1) terminate this Contract (in the way set forth in Subsection 6.10); (2) seek damages caused by the default, and attorney fees as provided by Subsection 6.13, first in Dispute Resolution, if applicable, and if not, then in an action at law or in equity; and 4

5 (3) In those instances where Dispute Resolution is inapplicable, proceed directly to seek such other relief as a court of competent jurisdiction may grant, and attorney fees as provided by Subsection (B) Provisions for Dispute Resolution or any other remedy shall survive termination of this Contract Buyer s Rights When Terminating. When Buyer lawfully terminates this Contract under the provisions of any Contract Document, the following apply: (A) Buyer may take possession of the site and of all the Work and of all material and equipment of Builder s then on the site. (B) Buyer may finish the Work in such reasonable manner as Buyer in Buyer s sole discretion selects, but in accordance with Contract Documents. (C) For Work on site and not paid for by Buyer, Builder shall be entitled to payment, and Buyer shall pay it. (D) If the cost of finishing the Work in the manner Buyer selected exceeds the unpaid balance of the Contract Price, Builder shall pay Buyer the difference between such cost and such balance. If such cost is less than such unpaid balance, Builder shall be entitled to the difference, and Buyer shall pay it Default to Buyer. (A) An event of default by Buyer will have occurred if Buyer: (1) fails to make payment under this Contract, when due; or (2) fails to perform any other covenant of Buyer s under Contract Documents. (B) A claimed event of default can become a default, only as determined by the following procedure: (1) Builder must give Buyer notice describing the event in reasonable detail ( Builder s Notice of Default ). (2) Buyer then may dispute, in writing provided to Builder, whether an event of default has occurred. If the parties cannot resolve the question within 15 days after Builder s Notice of Default is given, the matter must be submitted to Dispute Resolution. That process determines whether the claimed event of default has become a default. (3) As an alternative, Buyer may remedy the claimed event of default within 15 days after Builder s Notice of Default is given. Any question concerning Buyer s remedying the event of default shall be resolved either by the parties themselves or by Dispute Resolution. If Buyer chooses to remedy but does not do so (whether within the 15-day period or as determined in Dispute Resolution), the claimed event of default will become a default at the expiration of the appropriate time period Remedies Upon Buyer s Default. (A) Once a default of Buyer is determined to exist, Builder may: (1) terminate this Contract (in the way set forth in Subsection 6.10); (2) seek damages caused by the default, and attorney fees as provided by Subsection 6.13, first in Dispute Resolution if applicable, and if not, then in an action at law; and (3) In those instances where Dispute Resolution is inapplicable, proceed directly to seek such other relief as a court of competent jurisdiction may grant, and attorney fees as provided by Subsection (B) Provisions for Dispute Resolution and any other remedy shall survive termination of this Contract Other Reasons Builder May Terminate. Builder may also terminate this Contract (in the way set forth in Subsection 6.10) for any of these reasons: (A) The Work is stopped for a period of 30 days pursuant to a stop work or other order of a court or public authority having jurisdiction; provided that neither Builder nor any person under contract with Builder has caused the stoppage by any act or failure to act. (B) Labor or material become unavailable for a period of 30 days because of an act of government (such as declaration of national emergency) Builder s Rights When Terminating. When Builder terminates this Contract under any Contract Document, the following provisions apply: (A) If the Real Estate is then owned by Buyer: (1) Buyer shall pay Builder, on a quantum meruit basis and promptly, an amount equal to any deficiency arising from Builder s cost for the Work done to date of termination of this Contract, including labor, materials are (reasonable profit margin) in the partially completed Work, over payments made by Buyer to such date. If such payments exceed such cost of Builder, Builder shall pay Buyer, promptly after termination of this Contract, an amount equal to the excess of such payments. (2) Upon Buyer s payment of such deficiency, or if there is no such deficiency, Buyer may take possession of the site and of all the Work, and Builder shall execute and deliver to Buyer such document as Buyer or Buyer s legal counsel requires to transfer to Buyer title to all such Work. (3) Buyer shall also be liable to Builder for any damages Builder suffered by reason of the termination, with respect to: (a) loss of materials or equipment; (b) charging of reasonable overhead to date of termination; and (c) loss of profit to date of termination. (B) If the Real Estate is then owned by Builder or another person (not Buyer): (1) Buyer has the option, to be exercised by notice to Builder given within 10 days after the date this Contract is terminated, to complete purchase of the Real Estate. When title is transferred to Buyer, the Work in place on the Real Estate shall be considered to be on Buyer s Real Estate, and provisions (1), (2) and (3) of Subsection 6.09(A) apply. (2) If Buyer does not timely exercise the option Buyer has under Subsection 6.09(B)(1), or does not complete purchase in accordance with the applicable agreement for sale of the Real Estate, Buyer shall have no claim or right to the Work, and Builder may retain it, free and clear of any claim or right of Buyer. Likewise, Builder shall no claim or right against Buyer for Work not paid for at the time of termination or for any damages Way of Terminating. If either party wishes to terminate this Contract pursuant to any other option to do so granted by Contract Documents, the party shall give the other party notice of termination, stating with reasonable detail the basis for termination. The termination shall become effective on the tenth day after the date notice is given Dispute Resolution (limit $25,000). The process of Dispute Resolution consists of arbitration and Court action as follows: Any question or controversy involving a monetary claim not exceeding $25,0000 must be submitted to arbitration. Included are damages (claimed by either party), Builder s cost described in Subsection 6.09(A), and any other difference between the parties (within the $25,000 limit). This Contract constitutes the written consent of the parties to binding arbitration in accordance with the provisions of Subsection Only after an eligible matter has been submitted to arbitration and decided in that process, may a party bring an action at law or in equity upon such a matter, or will a court have competent jurisdiction over the parties or the matter. If a claim exceeds $25,000, it cannot be arbitrated unless both parties consent in writing to arbitration. Binding arbitration means you have to accept decision and there is no appeal except for limited issues. 5

6 6.12 The Arbitration Process. The following are provisions for arbitration: (A) The primary arbitrating agency is the Better Business Bureau of Northeastern Indiana, Inc. ( BBB ). If BBB is not able to conduct arbitration because it does not operate in a county where the Work is located, but another Better Business Bureau does operate there, that Better Business Bureau shall conduct arbitration, unless the parties agree on another arbitrator. (B) If a party believes in good faith that the aggregate amount in controversy exceeds, or is likely to exceed, $25,000, that party, as the objecting party, shall give the arbitrating agency (BBB or another), and the other party, notice to that effect. Each party may then give the arbitrating agency (with a copy to be given the other party) documents or writing to support the position of a party, within such time limits as that agency may impose. That agency will determine whether the aggregate amount in controversy is, or is likely to be, within the $25,000 limit, and its determination is binding upon the parties. (C) If a determination is that such amount exceeds, or is likely to exceed, $25,000, either party may withdraw from arbitration. However, both parties may consent in writing to arbitration. Binding arbitration means you have to accept decision and there is no appeal except for limited issues. (D) A party begins the process of arbitration by giving, to the other party and to the arbitrating agency, a notice briefly stating a claim, the grounds for it and the aggregate amount in controversy. (E) Such notice is a request to start arbitration. Because this Contract contains an agreement for binding arbitration as to matters within the $25, limit, no party may reject arbitration for failure to agree on the issues, or for failure to sign an agreement with the arbitrating agency. (F) Notice beginning arbitration shall be given within a reasonable time after a breach or a controversy has arisen, but no later than 60 days before the date when legal or equitable action would be barred by the applicable statute of limitations. (G) If a party seeks an award which includes: (1) loss of wages; (2) damages for personal injury or mental anguish, or both; (3) punitive damages; (4) consequential damages; or (5) any other element of damages; that party shall give, to the other party and to the arbitration agency, a notice to that effect. The notice shall state the amount claimed for each item for which an award is sought. An award cannot exceed the total amounts sought by a party. (H) Each arbitrating agency (BBB or another) shall conduct arbitration according to its rules, but SUBJECT TO the Arbitration Act if the Work is located in Indiana, or to an act or statute on arbitration of another state in which the arbitrating agency operates and the Work is located. In case of any conflict between rules and applicable legislation (the Arbitration Act or the statute or another state), the applicable legislation controls. (I) The purpose of arbitration is to resolve disputes within the limit stated; and to provide for enforcement of the award by a court, if necessary, by its entering judgment on the award as authorized by the applicable legislation. Binding arbitration means you have to accept decision and there is no appeal except for limited issues Costs and Attorney Fees. If any action at law or in equity, including enforcement of an award from Dispute Resolution, or in any Dispute Resolution involving a claim of $5,000 or more, the prevailing party shall be entitled to reasonable costs and expenses, including attorney fees. (This section does not limit Buyer s recovery of attorney fees under Subsection 7.03 and 7.04.) Section 7. No-Lien Agreement If the parties have selected No-Lien Agreement (see Term G), an essential element of this Contract is that no lien attach to the Real Estate, to the Work, or to any funds that may be payable on the Contract Price, in any case by reason of non-payment of Builder, or any sub-contractors, mechanics, journeymen, laborers, or persons performing labor upon, or furnishing materials or machinery for, the Work; and that Builder for itself and for all such suppliers and persons WAIVES all right to claim a lien or to file notice of lien for any purpose stated in IC Accordingly, Builder and the owner of the Real Estate (whether Buyer or some other person) have signed, contemporaneously with the signing of this Contract, a No-Lien Agreement (an Approved Form). That agreement is supplemental to, and a part of, this Contract, and the consideration stated in this Contract is likewise the consideration for the No-Lien Agreement This provision as to no-lien having been selected, Builder covenants that it will do no work if a No-Lien Agreement has not been signed by the parties and has not been recorded as required by statute to make it effective. Though the owner of the Real Estate has the responsibility to record, Builder will, for and on behalf of the owner, record the No-Lien Agreement, or cause it to be recorded WITHIN 5 DAYS AFTER SIGNING If notwithstanding a No-Lien Agreement any notice of lien is filed, Builder shall, at its expense and promptly, obtain the release or discharge of the lien. If Builder fails to do so, Buyer may do so and then offset against any amounts due or to become due under this Contract the sum Buyer so expended, and Buyer s costs and expenses (including attorney fees for securing release or discharge of lien). If an amount payable under this Contract is less than the sum Buyer expended, Builder shall indemnify Buyer to the extent required to make Buyer whole for Buyer s expenditures Builder indemnifies Buyer against, and holds Buyer harmless from, loss, damage, liability, cost or expense (including attorney fees) resulting from the filing of a notice of lien or enforcement of a lien. Builder may satisfy such obligation to indemnify by providing Buyer a bond, issued by a financially sound insurance company in the business of issuing bonds in the state where the Work is located, guaranteeing the release or discharge of the lien If Builder is the owner of the Real Estate at the time this Contract is signed, Builder shall convey the Real Estate to a person who may be a trustee, a nominee, an agent, or other representative of Builder, and then enter into a No-Lien Agreement with the transferee. Such agreement is intended to be the No- Lien Agreement required by Subsection 7.01, and Builder is responsible for having it comply with the provisions of this section and IC , et. seq (A) Within 10 days after the signing of a No-Lien Agreement between Builder and an owner other than Buyer, Builder shall furnish Buyer: (1) a counterpart of the No-Lien Agreement duly signed and acknowledged and timely recorded; and (2) an opinion of Builder s legal counsel to the effect that the No-Lien Agreement is a valid and legally binding instrument between the parties to it and effective for the purposes of complying with the no lien provision (Subsection 7.01) of this Contract. (B) If Builder does not timely deliver such items, Buyer may terminate this Contract, at any time within 30 days after construction begins, by giving Builder notice to that effect. If Builder has given Buyer notice that neither such counterpart nor such opinion can be given, Buyer may terminate this Contract by giving Builder notice to that effect within 15 days after the date Builder gives such notice If as a part of this Contract Buyer is to buy the Real Estate upon which the Work is to be, or is situated, Buyer may request Evidence of Title to be received reasonably before the date of payment for the Real Estate or any other payment under this Contract, from which Buyer can determine the title and the filing of any notice of intention to hold a lien for material or labor. If any such notice has been filed, or if any charge for which a lien could be filed has not been paid, 6

7 Builder shall obtain the release or discharge of all liens and pay all such charges at or before any payment is made for conveyance of tile to Buyer. Further, Builder shall give Buyer such affidavit as Buyer may require to assure that no liens exist at the time title is conveyed Even though this Contract and the No-Lien Agreement may contain differing provisions, or one instrument may contain provisions which the other does not have, the parties intend that the two instruments be construed together Personal Responsibility of Buyer Under Statute. (A) IC makes the owner personally responsible for indebtedness for services rendered and claims made by a subcontractor, a lessor of equipment, a journeyman, or a laborer under circumstances stated in the statute notwithstanding the existence of a valid no-lien agreement. The notice referred to in IC et seq. may be given to the agent of the owner if the owner is absent. Builder shall not be deemed an agent of Buyer for that purpose. If despite this disclaimer Builder receives a notice given under IC , Builder shall immediately notify Buyer of it. (B) If any proper claim is made under IC , Builder shall, at its expense, obtain the release or discharge of the claim. If Builder fails to promptly do so, Buyer shall have the same rights against Builder as Buyer has under Subsection 7.03; and Subsection 7.04 applies. Section 8. Recording 8.01 A memorandum of this Contract may be recorded by either party. The absence of a recorded instrument shall not affect the effectiveness or validity of this Contract. Section 9. Definitions The following terms have the meaning here set forth, unless a different meaning is clearly intended by the context: (A) Approved Form: a form approved by the Allen County Indiana Bar Association, Inc., and by either Home Builders Association of Fort Wayne, Inc. or the Fort Wayne Board of Realtors, Inc., including the Approved Forms listed in this Contract. (B) Arbitration Act: the Uniform Arbitration Act as enacted in Indiana by IC et. seq. (C) Contract Documents: (1) this Contract; (2) plans, specifications and a site development plan pertaining to the Work, and any modifications, addenda or changes of any of them; (3) Approved Forms signed by the parties; and (4) Indiana Quality Assurance Builder Standards; (5) any other documents the parties designate in writing to be a Contract Document. (D) Dispute Resolution: as set forth in Section 6. (E) Escrow Fund: the money held in escrow by the Escrow Agent, under an Escrow Agreement. (F) Evidence of Title: an abstract of title or an ALTA Owner s Policy, as specified by the person requesting it, in either case showing marketable fee simple title to the Real Estate to be in the owner as of a date within six months before, or at any time after, the date of this Contract. (G) New Home Construction Warranty Act: IC et. seq. (H) Real Estate: the real estate that is legally described on the first page of this Contract. (I) Survey: a certificate of survey of the Real Estate by an Indiana registered land surveyor, dated within six months before, or at any time after the date of this Contract, and identifying: (1) the location of corners by stakes and on the drawing; (2) the dimensions and the location of any improvements on the Real Estate; (3) building lines and easements; and (4) the flood zone or area applicable. (J) Work: the building and improvements to be constructed on the Real Estate according to the Contract Documents. (K) Worker s Compensation Act: the Indiana Worker s Compensation Act (IC 22-3 et. seq.). (L) Worker s Compensation Board: the worker s compensation board of Indiana created under IC et seq. The designation IC means an Indiana Statute or Act contained in the Indiana Code, and includes legislation amendatory of or supplemental to it. Section 10. Title to or Purchase of the Real Estate If either Builder or Buyer is shown on the first page as the owner of the Real Estate, the party so shown certifies, by signing this Contract, that such party has marketable fee simple title to the Real Estate, free and clear of all liens, encumbrances and charges EXCEPT: (A) easements, restrictions and encumbrances of record, none of which interfere with the Work; and (B) current and future real estate taxes and non-delinquent assessments If Builder or another person (not Buyer) is the owner of the Real Estate, its sale to Buyer must be pursuant to an applicable form of agreement to purchase real estate, such as the Agreement to Purchase Unimproved Real Estate, an Approved Form If Buyer is the owner of the Real Estate, Builder may give Buyer, at least 15 days before the Work is scheduled to start, notice that Builder wants evidence of Buyer s ownership of the Real Estate, or a Survey of the Real Estate, or both. The notice shall state the date on which the Work is scheduled to start. Such date cannot be earlier than 15 days after date of the notice. At least 2 days before Work is scheduled to start, Buyer shall, at Buyer s expense, give Builder the document(s) requested. Evidence of ownership may consist of Evidence of Title (as defined in Section 9). If Buyer fails to so furnish the requested document(s), Builder may order them and add their cost to the Contract Price. Builder may, for its own purpose and at its own expense, order a report of search, as such term is understood by title companies in the community where the Real Estate is located Any delay caused by Buyer s delay or failure under Subsection or any other Section of this Contract shall extend the time, equally, for Builder s performance under this Contract Before construction begins, Builder shall have staked the placement of improvements to be constructed on the Real Estate; and, promptly after the foundation has been completed, cause an Indiana registered land surveyor to issue an as built certificate, as that term is commonly understood among surveyors and contractors Both Builder and Buyer agree that the Real Estate must be suitable for the Work. To that end the following apply: (A) By suitable is meant that the Real Estate: (1) complies with zoning and other governmental regulations permitting construction of the Work; 7

8 (2) has sufficient dimensions to accommodate location of the Work as contemplated by Contract Documents, taking into account easements, building line restrictions, or any other matter that might interfere with the location of such Work; (3) has physical characteristics, whether surface, sub-soil or otherwise, that admit the Work to be constructed within the cost allowed in the Contract Price; (4) has access to utility services (water, sewer, electricity, gas for heating, telephone) at prevailing cost; or if not as to any such services, can be served by a private system providing the utility service that may be lacking (for example, a private water supply or a private sewage disposal system); and (5) has legal access to public streets or roads. (B) When Builder discovers at any time that the Real Estate is not suitable, Builder shall promptly give Buyer notice of the discovery, specifying in reasonable detail the condition(s). Within 15 days after the giving of such notice either party may terminate this Contract (in the way set forth in Subsection 6.10) for failure of the Real Estate to be suitable. The other party, upon receipt of notice of termination, has 5 days within which to submit the issue of suitability to Dispute Resolution. If, notwithstanding an effective date of termination under Subsection 6.10, the other party timely seeks Dispute Resolution, it shall determine the issue of suitability and the effective date of termination (if termination is so determined). If a party has not timely sought Dispute Resolution, Subsection 6.10 determines the effective date of termination. Builder has made and is under no continuing obligation to undertake any investigation into whether the Real Estate is suitable or not. (C) Once this Contract is so terminated, neither party shall have any further right or remedy upon termination of the Contract, EXCEPT that if at the time construction began Buyer was owner of the Real Estate, Buyer shall pay Builder promptly after termination Builder s cost for the Work in place at date of termination. If at such time Builder, or any other person who is not Buyer, was owner of the Real Estate, Builder shall bear such cost (without any reimbursement from Buyer). Nothing in this provision, however, is intended or shall be construed to prevent Builder from pursuing any remedy for recovery of such cost Builder may have against any person other than Buyer. Section 11. Radon, Mold, and Environmental Hazards Buyer understands that radon is a gas formed by the decay of the element radium contained in the earth s crust. The United States Environmental Protection Agency has expressed concern over the presence of radon in residential buildings. Prolonged exposure to high levels of indoor radon (or its progeny) may affect adversely the health of residents Builder has made no investigation into the presence, or the absence of radon, mold, or other environmental health hazards and its effect on any warranty of good workmanship, habitability, merchantability or fitness of purpose, except as may be stated by an agreement between the parties for Buyer to purchase the Real Estate. BUYER ACKNOWLEDGES THAT BUYER UNDERSTANDS AND ACCEPTS BUILDER S DISCLAIMER OF ANY WARRANTY REGARDING RADON, MOLD, OR OTHER ENVIRONMENTAL HAZARDS AND ITS EFFECT Radon, mold, or other environmental hazards not being any element of this Contract, Buyer will not delay or refuse payment of the Contract Price based on any claim as to either of them. As Buyer accepts possession of the Work, Buyer will be deemed to have done so with clear understanding that radon, mold, or other environmental hazards are not a part of this Contract, and that Buyer releases Builder from all claims based upon or arising from radon, mold, or other environmental hazards. Section 12. Miscellaneous This Contract binds, and inures to the benefit of, the parties and their respective heirs, personal and legal representatives, successors and assigns, and shall be interpreted under the laws of the State of Indiana Time is of the essence This Contract with its Approved Forms signed by the parties, contains all of the agreements of the parties, all prior negotiations, understandings and agreements having merged into it. Amendments shall not be effective unless made in writing and signed by the parties Headings are for reference only, and do not affect the provisions of this Contract. Where appropriate, the masculine gender includes the feminine or the neuter, and the singular includes the plural A notice shall be deemed to have been given if it is in writing and has been either personally delivered to a party, mailed, by registered or certified U.S. mail, return receipt requested, or sent by express courier such as Federal Express, UPS, or similar carrier guaranteeing next day delivery, to a party at the address stated in this Contract for the party, or to such other address as a party may designate in a notice. Refusal by a party to accept delivery of a notice (whether by mail or otherwise) cannot defeat the giving of a notice In computing a time period prescribed in this Contract, the day of the act or event shall not be counted. All subsequent days, including intervening weekend days and holidays, shall be counted in the period. The last day of the period so computed is to be included unless it is a weekend day of a legal holiday as defined under Indiana law, in which case the period is extended to the next day that is not a weekend day or holiday. Revised August