Field guide

Remodeling Change Orders: Who Pays When the Plan Changes

Whoever asks for the change pays for it, and the change order is the document that makes that real. The expensive version of this rule is the allowance overage, where the homeowner picks a finish that costs more than the allowance and the difference comes back as a change order.

The kitchen is half demolished when the homeowner finds a tile she likes better than the one in the contract. It costs $8,000 more than the allowance. Nobody argues about the tile, they argue about who pays the $8,000, and the answer is sitting in a clause neither of them read when they signed.

Change orders are the most common source of remodeling disputes, and they are also the most avoidable. The document is simple, the rule is simple, and the fights happen because the document was never signed before the work started.

Who pays, and when the answer changes

The default rule is that whoever requests the change pays for it. The homeowner asks for different tile, the homeowner pays the difference. The contractor finds rotted framing behind the wall, the contractor absorbs it if the contract covers hidden conditions, or it becomes a change order if it does not. The requester pays is the starting point, not the whole answer.

The exception is the condition nobody could see. A remodeler opens a wall and finds knob and tube wiring or a sagging joist, and that is not a change anyone requested. Whether the homeowner pays depends on the contract's hidden conditions clause, which is the clause most worth reading before signing.

Several states require change orders in writing by law, and the rest of the industry treats it as standard practice anyway. A verbal yes on site is not a change order. The work should not start until the document is signed, with the price, the scope change, and the effect on the schedule all stated.

The allowance trap

An allowance is a budget line for a finish the homeowner has not picked yet: $5,000 for tile, $3,000 for fixtures, $8,000 for cabinets. The trap is that the allowance is almost always set low, and the overage arrives as a change order after the homeowner has already fallen in love with the expensive option.

The math is straightforward and worth seeing once. An $8,000 overage on a tile allowance, marked up at the contractor's standard 15 percent, adds $1,200 in markup on top of the $8,000, for a $9,200 change order. The markup is legitimate, the contractor is managing the purchase and the install, but it should not be a surprise.

The defense is to price the finishes before signing the contract. Pick the actual tile, the actual fixtures, and the actual cabinets, and put real prices in the contract instead of allowances. Every allowance left open is a change order waiting to happen.

How a change order should read

A good change order has four things: what changes, what it costs, how it affects the schedule, and both signatures. The scope description should be specific enough that a stranger could tell what was added or removed. Vague descriptions are how a $2,000 change becomes a $6,000 argument.

Deletions and credits go in writing too. When the homeowner drops the heated floor or swaps a cabinet run for open shelving, the credit should appear on a change order with the same formality as an addition. Credits that live only in a text message have a way of never appearing on the final invoice.

The signature matters more than the form. A change order signed before the work starts is a contract amendment. A change order signed after the work is done is a receipt for an argument. The sequence is the whole point, and the remodelers who never have change order disputes are the ones who stop work until the paper is signed.

Frequently asked questions

Who pays for a change order in a remodel?

Whoever requests the change pays for it. The homeowner pays when she asks for different finishes, and the contractor absorbs hidden conditions when the contract covers them. Several states require change orders in writing, and the work should not start until the document is signed with the price and schedule impact stated.

What is an allowance overage in remodeling?

An allowance is a budget line for a finish not yet picked, and an overage is the difference when the real choice costs more. An $8,000 overage marked up at 15 percent adds $1,200, for a $9,200 change order. Pricing finishes before signing the contract is the way to avoid the trap.

Do change orders need to be in writing?

Yes, in several states by law, and everywhere by standard practice. A verbal yes on site is not a change order. The document should state what changes, what it costs, how it affects the schedule, and carry both signatures before the work starts.

Can a change order reduce the price?

Yes, deletions and credits are change orders too. When a homeowner drops a feature or swaps to a cheaper finish, the credit should appear on a change order with the same formality as an addition. Credits that live only in a text message often never appear on the final invoice.