Renovation is an important step in creating a warm and comfortable home environment. However, some renovation companies may engage in false advertising, breach of contract, project delays, fraudulent use of materials, and other issues. Worse still, certain unscrupulous businesses, seeking illicit gains, exploit loopholes in renovation contracts to infringe upon consumer rights. Many people may have had this experience: after the renovation is completed, you enter your new home with high expectations, only to find problems such as cracked walls, falling floor tiles, and leaking water and electrical facilities, leaving you utterly distressed.

To help everyone better protect their own interests, we have specially prepared a guide on matters to note in home renovation contracts. Through this guide, you will be able to understand the details that require attention, the terms that must be clarified, and how to avoid falling into the pitfalls of renovation contracts. Now, let us together explore the potential risks in home renovation contracts and learn about relevant legal knowledge points, so as to exercise greater caution when signing contracts.

1. Principles for Drafting a Renovation Contract — Be Detailed and Clear:

A renovation contract should include detailed information such as the scope of renovation, quality standards for the work, project timeline, payment methods, and liability for breach of contract. Before signing the contract, it is essential to carefully review its contents and communicate fully with the renovation company. Avoid vague or ambiguous terms that may create hidden risks for the later stages of cooperation.

(1) The Contract Shall Be in Written Form; Remember That Oral Promises Are Not Included in the Contract

A resident, Xiao Li, from a certain city agreed with a renovation company to use a specific high-end brand of flooring and paid the corresponding fees. However, during the renovation process, he discovered that the renovation company had actually used a low-end flooring product from another brand. When Xiao Li approached the renovation company to discuss the matter, the company claimed that the oral promise of the high-end flooring was merely an exaggerated sales pitch by the salesperson and not a term agreed upon in the contract.

Pursuant to Article 469 of the Civil Code: "Parties may conclude a contract in written, oral, or other forms." Oral contracts are also legally valid and effective. However, oral contracts cannot fully protect the rights and interests of the property owner and are highly prone to disputes. In this case, because the oral promise was not incorporated into the written contract, it was difficult for Xiao Li to rely on the oral agreement to safeguard his rights. Although oral contracts are legally valid, the lack of written evidence creates difficulties in enforcing rights. Therefore, to avoid such situations, the author strongly recommends that everyone insist on using written form when signing renovation contracts and explicitly include all important terms and oral promises in the contract. Only in this way, when disputes arise between the parties, will there be clear evidence to support one's claims of rights and interests.

(2) What Contents Should a Home Renovation Contract Specify?

Article 24 of the "Measures for the Administration of Interior Decoration and Renovation of Residential Housing (2011 Revision)" issued by the Ministry of Housing and Urban-Rural Development stipulates: "The renovator and the decoration and renovation enterprise shall enter into a written contract for interior decoration and renovation of residential housing, clearly defining the rights and obligations of both parties. The contract for interior decoration and renovation of residential housing shall include the following main contents: (1) the name or company name, address, and contact telephone number of the client and the contractor; (2) the number of rooms, gross floor area, items, methods, specifications, quality requirements, and quality acceptance methods for the interior decoration and renovation of the residential housing; (3) the commencement and completion dates of the decoration and renovation project; (4) the content and duration of the warranty for the decoration and renovation project; (5) the price of the decoration and renovation project, the method and timing of pricing and payment; (6) the conditions for modification and rescission of the contract; (7) liability for breach of contract and the means of dispute resolution; (8) the effective date of the contract; (9) other terms that the parties deem necessary to specify."

Local housing and urban-rural development commissions or market supervision administrations have also published some standard home renovation contract templates, which can be used for reference. For example, the "Shanghai Household Decoration and Renovation Construction Contract" (URL: https://cont.12315.cn/View?id=61ea328e-37f2-484c-8d83-50eb749d42df) formulated by the Shanghai Administration for Market Regulation and the Shanghai Municipal Commission of Housing and Urban-Rural Development. The contents of these official templates are generally applicable and can be filled in according to the actual renovation situation to protect the rights of the property owner. Furthermore, property owners who have the means may engage professional lawyers to assist in signing a more specialized home renovation contract, thereby ensuring full protection of their interests.

2. Beware of Hidden Costs! Pay Attention to Pricing and Change Order Clauses:

A common phenomenon exists in the home renovation market: even after signing a renovation contract with a stated quotation, the final execution price often exceeds the budget. Be cautious of hidden fees and seemingly insignificant clauses that may unknowingly cause you to spend a significant amount of additional renovation costs.

In his renovation contract, Xiao Wang agreed to a total project price of 300,000 RMB and clearly specified the payment schedule and milestones. However, during the construction process, the renovation company demanded that Xiao Wang pay additional costs for plumbing and electrical repair work, claiming that this work was not included in the contract. Xiao Wang had not anticipated potential issues with the plumbing and electrical systems and therefore did not specifically stipulate these costs in the contract. Nevertheless, the renovation company raised the issue of additional costs during construction, stating that these were necessary repairs. To avoid project delays, Xiao Wang had no choice but to agree to pay the extra fees. In this case, because the contract did not explicitly address the costs of plumbing and electrical repair work, Xiao Wang was required to bear the additional expenses.

When signing a renovation contract, we should pay attention to potential additional project costs and clearly stipulate them in the contract to avoid future disputes and cost overruns. Additionally, another possible scenario is material cost overruns. In the contract, the renovation company may provide a fixed material cost, but if material costs actually exceed this amount, the company may demand additional payment. Therefore, when signing the contract, it is essential to ensure that the material cost provisions are clear and detailed to avoid unexpected increases. In summary, to avoid potential disputes and additional costs, we should clearly stipulate the total project price, payment schedule, and milestones in the contract, and pay attention to whether various taxes, fees, and unexpected additions are included. Furthermore, potential additional project costs and material cost overruns should also be explicitly agreed upon to protect one's interests.

3. Beware of Contract Loopholes; Pay Close Attention to Work Quality and Acceptance Clauses:

Exploiting contract loopholes has become one of the profit-making methods for some renovation companies, such as using vague language in the contract or failing to specify the exact models of building materials. Renovation contracts should clearly define work quality standards, including the brand, specification, and quality of materials used. During the acceptance process, each item of work should be inspected to verify that the quality meets expectations, and the renovation company should be required to make necessary corrections.

Xiao Li signed a renovation contract with a company, which explicitly stipulated the use of specific brands of flooring, wall paint, and tiles. During the renovation process, however, the company used lower-grade flooring and wall paint, and also used cheaper tiles for the walls, resulting in a decline in work quality. Upon discovering this issue, Xiao Li demanded corrective action from the company. However, the company refused to admit to using inferior materials, pointing out that the contract only specified the brand but did not explicitly define the specific models. The company claimed it had completed the work in accordance with the contract and was unwilling to make corrections. In this case, the renovation company used ambiguous clauses in the contract to charge additional fees and used lower-grade materials to reduce costs. This illustrates that when signing a renovation contract, one should focus on the details of materials, including brand, model, and quality, and clearly stipulate these in the contract. Furthermore, during the acceptance process, each item of work should be inspected to ensure the quality meets expectations, compelling the renovation company to make necessary corrections.

In summary, issues of ambiguous clauses and "adhesive clauses" in renovation contracts require consumer attention. When signing a contract, one should carefully read the terms, specify clear material brands, specifications, and quality, and carefully consider various hidden costs and contract termination clauses. Additionally, during the construction process, acceptance inspections should be conducted, and necessary corrections should be made to ensure the work quality meets expectations.

Is Everything Fine Once the Renovation is Complete? The Key is to Clearly Define Warranty Terms!

When renovating his house, Xiao Zhang signed a renovation contract with a company, which stipulated a one-year warranty period. Two years after the renovation was completed, Xiao Zhang noticed significant cracking in the flooring and peeling of the wall paint. He immediately contacted the renovation company, hoping to obtain free after-sales repair services. However, the company rejected Xiao Zhang's request, citing the expiration of the warranty period. Xiao Zhang was very disappointed, and upon reviewing the contract, he also discovered that the warranty clause did not clearly define the specific scope of responsibility or the method of repair.

The warranty clauses in a contract are of significant importance to the rights and interests of consumers. When signing a decoration contract, consumers should pay close attention to details such as the warranty period, warranty liability, and warranty deposit, and should strive to clearly define the specific scope of liability and repair methods. If the warranty clauses in the contract are ambiguous or contain loopholes, consumers may rely on relevant laws and regulations to protect their legitimate rights and interests.

(1) The warranty period may refer to Article 40 of the "Regulations on the Quality Management of Construction Projects," which stipulates: "Under normal conditions of use, the minimum warranty period for construction projects is: ... (ii) for roof waterproofing works, waterproofing of bathrooms, rooms, and exterior walls, 5 years; (iii) for heating and cooling systems, 2 heating periods and 2 cooling periods; (iv) for electrical wiring, water supply and drainage pipelines, equipment installation, and decoration works, 2 years. The warranty period for other items shall be agreed upon by the contracting party and the contractor. The warranty period for a construction project shall commence from the date of acceptance upon completion." For other decoration contents not covered above, it is recommended to agree on a warranty period of no less than 1 or 2 years.

(2) Regarding warranty liability, it is recommended to stipulate that the decoration party shall provide free warranty repairs during the warranty period; after the warranty period expires, the decoration party may provide paid repairs (which may include reasonable charges for labor and material costs).

(3) Regarding the warranty deposit, it is recommended to agree on retaining a certain percentage (typically 5%) of the total decoration cost as a warranty deposit, which shall be settled with the decoration party upon expiration of the warranty period. What if the decoration party absconds or fails to fulfill its warranty obligations? In such a case, the owner may withhold the warranty deposit, engage a third party to carry out the repairs, and deduct the repair costs from the warranty deposit. If the repair costs exceed the amount of the warranty deposit, the owner may claim compensation from the decoration party in accordance with the methods agreed upon in the contract.

4. Liability for Breach of Contract:

Xiao Li entered into a decoration contract with a decoration company, which stipulated the project completion date and quality requirements. However, during the course of the project, Xiao Li discovered that the decoration company had delayed completion and that the construction workmanship exhibited obvious defects, resulting in a series of quality issues. Xiao Li was extremely dissatisfied with this situation, believing that the decoration company had breached the agreed-upon timeline and quality standards, causing significant disruption and loss to his daily life. In the contract, Xiao Li found clear provisions regarding the liability for breach of contract by both parties and the methods of compensation. According to the contract, if the decoration company fails to complete the project on time or the project quality fails to meet the standards, the consumer has the right to demand that the breaching party assume corresponding liability and pay compensation. Xiao Li decided to protect his rights and filed a claim for liability for breach of contract against the decoration company. He demanded that the decoration company bear the additional costs incurred due to the delay, and rectify the quality issues and provide compensation. Initially, the decoration company ignored this, believing that Xiao Li would find it difficult to effectively enforce his rights. However, Xiao Li pointed out that the contract stipulated the method for dispute resolution, namely, filing a lawsuit with the People's Court. Faced with Xiao Li's resolute attitude and the contractually stipulated liability for breach, the decoration company ultimately agreed to negotiate and assumed the costs of the delay as well as the costs for rectifying and compensating for the quality issues. Through this case, we can see the critical importance of clearly stipulating the liability for breach of contract and the methods of compensation for both parties in a decoration contract. Consumers should carefully read the contract before signing and ensure that specific details are clearly articulated, especially the provisions concerning liability for breach and compensation methods. Furthermore, the choice of forum and method for dispute resolution is also an important factor to consider. By clearly defining the liability for breach of contract and the methods of compensation, consumers can more effectively protect their rights and interests.

Finally, we remind all residents to ensure the following before signing a decoration contract:

1. When selecting a decoration company, the owner must carefully verify its business license and relevant qualification certificates, and choose a merchant with a good reputation.

2. Sign a formal written contract and fully understand the contract terms, including the scope of work, construction standards, material specifications, project quality standards, acceptance procedures, payment schedule, etc. The contract terms should be specific, detailed, and enforceable.

3. The owner should communicate fully with the decoration company to clarify the expectations and requirements of both parties.

4. Relevant written and electronic evidence should be preserved. The performance period of a decoration contract is long and cumbersome; therefore, the decoration contract, change orders, quotations, WeChat chat records, etc., should be properly kept. Photographs and videos of the site should also be taken and saved for future needs.

A legally compliant renovation contract is an important tool for protecting your rights and interests. It is hoped that the above information will assist you in avoiding unnecessary risks and disputes during the renovation process. Wishing you a smooth and pleasant home renovation!