10 important terms to include in your quotes and contracts - Residential contractor's guide

TL;DR:

In 2026, material costs, labor availability, and customer expectations are more unpredictable than ever. Clear terms in your quotes are no longer a nice-to-have, they are how you protect your profit and avoid disputes. Every residential quote should clearly spell out validity, scope, exclusions, site requirements, insurance limits, price changes, and who owns the materials until they are paid in full.

Construction estimating and quoting is a tricky business. Even once you have construction estimating software that works well for your business, there is still a chance that your quotes will be misunderstood, that customers will assume something is included when it is not, or that you find yourself in some kind of disagreement with your customers.

Since 2020, contractors have seen how fast prices, lead times, and availability can change. In 2026, those lessons should be built into your documents, not just stored in your memory.

The best way to avoid problems once your construction project is underway is to make sure everything important is covered in your quote and terms. Here are a few must-have terms you should include in any construction quote.

1. The validity period

Every quote should be dated and have a fixed validity period. This protects you when supplier or labor pricing changes unexpectedly.

In stable times, thirty days is common, but in a volatile market you might choose seven or fourteen days instead. The key is to state this clearly in writing, for example:

“This quote is valid for 14 days from the date shown. After that, pricing and availability may change.”

2. Scope, quantities, and specifications

Include a clear note that the quote covers only what is described in the quantities and specifications listed. Make it clear that any changes to those items may change the price.

Be as detailed as possible in your description of scope, quantities, and specifications, so there is no room for interpretation or “I thought that was included” conversations later. In the construction world, this is known as qualifying your bid or quote.

Where possible, reference or attach drawings, selections, or a list of allowances, and make sure the wording in your quote matches those documents.

3. No automatic prorating of price

Include a clause that states that prices cannot simply be reduced by prorating if the size and scope of the project changes.

Customers often assume that if the job is reduced by twenty percent, the price should also fall by twenty percent. They do not realize that your price includes fixed costs such as mobilization, setup, supervision, design time, or permits.

State that if the scope changes, you will issue a revised quote or change order rather than automatically prorating the price.

4. A clear list of exclusions

Anything that is not included should be expressly excluded, in writing. This is one of the most powerful ways to prevent disputes.

Typical exclusions on residential projects might include:

• Permits and inspections
• Engineering or architectural design
• Surveys and property line disputes
• Landscaping, irrigation, or fencing
• Painting, window coverings, or security systems

If your company does not handle something, say so directly.

5. Your requirements to complete the work

You cannot perform the work as quoted unless certain conditions are met. List those requirements clearly so that the client understands their responsibilities.

These often include things like:

• Safe and reasonable access to the site
• Secure storage for your materials and tools
• Availability of electricity and water
• Clear driveways or parking for trucks and deliveries

If you charge extra when these conditions are not met, mention that too.

6. Demolition and waste removal

In residential work, demolition and waste removal are constant sources of confusion.

Many companies will remove old materials but do not include the cost of the waste bin or hauling. Others include a single bin, and anything extra is charged as a variation.

State clearly whether your quote includes:

• Demolition only
• Demolition and hauling
• Waste bins, dump fees, and how many loads are included

If the client needs to arrange their own waste bin or removal, make that obvious.

7. Site readiness and other contractors

Often, your work depends on another contractor finishing their part first. For example, a landscaper might need to bring an area up to grade, or a foundation contractor must finish concrete work before you can start framing.

Make it clear in your quote that:

• You cannot start work until specific prerequisites are complete
• Delays caused by others may lead to schedule changes or additional costs
• You are not responsible for the quality of work done by other contractors

This helps manage expectations on complex residential projects where multiple trades are involved.

8. Insurance limitations and conditions

If there are any limitations on your insurance, you should mention them in your terms. This is especially important for occupied homes.

Common examples include:

• Requirements that certain areas remain vacant during specific work
• Limits on storing materials or tools inside the home overnight
• Restrictions on work hours
• Requirements for the owner to notify their own insurer about the project

You do not need to reproduce your whole policy, but you should highlight any conditions that affect how and when you can work.

9. Price adjustment and escalation clauses

On longer projects, materials and labor can increase in cost between the time you quote and the time you install. In 2026, this is still a real risk.

If you might need to adjust prices during the project, include an escalation clause in your terms. For example, you might:

• Tie material prices to supplier invoices at the time of purchase
• Allow for a percentage-based adjustment if costs rise beyond an agreed threshold
• Specify that allowances will be reconciled to actual costs at the end of the job

The goal is to be transparent about how and when the price may change, so clients do not feel blindsided.

10. Ownership of materials until paid in full

Finally, always include a clause that states that all materials used to complete the project remain your property until they are paid for in full.

If your customer does not pay when they should, you may need to pursue a lien or other legal remedy. Being clear about the ownership of materials can make that process simpler and provides an extra layer of protection.

As your construction business grows and changes, you will probably discover additional terms that should be added to your quotes. Often, mistakes and challenges are the best teachers. When something goes wrong, update your standard terms so it does not happen again.

Make sure that whatever construction estimating software you choose allows you to:

• Customize your terms of quotation
• Save standard clauses so you are not rewriting them each time
• Keep your documents consistent across your whole team

Review your terms regularly, at least once a year, to make sure they still reflect the way you work in 2026 and beyond.