Consumer protection law in all states puts builders – especially residential builders -- at a disadvantage when trying to enforce their construction contracts. Law in nearly every state penalizes contractors -- not property owners -- if the contract omits any required notice or disclosure. Penalties for using a defective contract can be major: fines to $1,000, suspension, loss of lien rights and even jail time. Click here for a list of the penalties your state imposes on contractors who use defective contracts. Every state has the right to set their own requirements for construction contracts. And all have.

Even if your defective contract doesn't draw attention from state or local authorities, savvy owners (and their legal counsel) will be quick to focus on any little flaw in your agreement. Both state and federal law backs up property owners who have a grievance and don't want to pay a contractor. In many states, using a defective contract is considered a "deceptive act or practice", entitling the owner to collect both damages and legal fees from the contractor – even if the owner doesn't have a single valid complaint about the work itself.