How to Avoid Getting Screwed by Change Orders in Commercial & Residential Projects

Change orders are critical in the construction industry.

Karalynn draws from decades of experience to explain that only written, signed documents can legally alter a contract's terms. Verbal agreements or side conversations simply don't hold up. Understanding and properly handling change orders is essential to avoid getting screwed on extra work.

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Key Takeaways

1. Change orders are essential legal documents in construction projects, required to alter any terms in a contract, such as scope of work, price, or completion date. Nothing verbal or informal can change the agreement—only a written, signed change order is enforceable.

2. In commercial construction, contracts usually dictate strict, detailed change order processes. It's crucial to understand who can approve change orders, the deadlines for submission and response, and the importance of never performing extra work before a signed change order is in place, or you risk not getting paid.

3. Deductive change orders, or back charges, are used to deduct money for corrections or damages. Contractors should not accept them at face value—instead, they should request proof of costs, payment receipts, and justification. This ensures back charges are legitimate and not arbitrary.

4. Residential contractors have more control over contract terms but must clearly educate homeowners about the change order process. It's vital to set expectations upfront, document every change in writing, and often secure payment for change orders before extra work begins to avoid disputes and "amnesia" from clients at the end of the project.

5. Across all types of construction, being proactive, detail-oriented, and documenting everything in writing are the best defenses against disputes. Asking questions, pushing back on unfair deductions, and ensuring all agreements are properly recorded will greatly reduce the risk of not getting paid or being unfairly charged.