AIA Document A112–2021 is intended to be used for a single-family residential project when the owner hires a home builder to provide design services and construction. A112 consists of the agreement portion and Exhibit A, a Construction Phase Amendment, executed when the owner and home builder have agreed on the contract sum.
A112–2021 is a streamlined document developed to meet the needs of residential owners and home builders. For residential projects where a home builder will provide construction only, parties may wish to use AIA Document A111™–2021, Agreement Between Owner and Home Builder for Construction of a Single Family Home.
It is important to recognize that the home builder assumes responsibility and liability for both the design services and construction work. Prior to entering into this agreement, the home builder should consult with its legal counsel and insurance advisers. Some states may restrict or prohibit a single entity from providing both design and construction services under statutes that regulate architectural registration, contractor licensing, or incorporation of professionals.
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The contractual and licensing requirements for the construction of a single-family home may vary in different jurisdictions. The owner and home builder should consult local authorities or an attorney to verify the requirements applicable to this agreement. The agreement contains fill points to provide information related to jurisdictional requirements.
Date. The date represents the date the agreement becomes effective. It may be the date an original oral agreement was reached, the date the agreement was originally submitted to the owner, the date authorizing action was taken or the date of actual execution.
Parties. Parties to the agreement should be identified using the full address and legal name under which this agreement is to be executed, including a designation of the legal status of both parties (sole proprietorship, partnership, joint venture, unincorporated association, limited partnership or corporation [general, limited liability, close or professional], etc.). Where appropriate, a copy of the resolution authorizing the individual to act on behalf of the firm or entity should be attached. Other information may be added, such as telephone numbers and electronic addresses.
Project. Describe the proposed project in sufficient detail to identify: (1) the official name or title of the facility; (2) the location of the site; (3) the proposed building usage; (4) the legal description of the property or any statutorily required description of the project; and (5) the size, capacity or scope of the project.
Article 1 – General Provisions
§ 1.1 Initial Information. The parties should take care to be as explicit and detailed as possible with all relevant initial information.
§ 1.2 Statutory and Other Requirements. Many jurisdictions require that contracts for residential projects include specific language that places the owner of the project on notice of its rights concerning the contract. These provisions are often mandatory and there may be specific statutory language, format, and font requirements that must be closely followed. This section provides fill points for common topic areas where jurisdictional requirements may be included. It is important to consult with the relevant authorities having jurisdiction over the project or legal counsel to ensure that the proper information is included in the contract.
§ 1.2.6 This section provides a fill point, in which the owner is prompted to provide additional requirements specific to a residential project, such as Homeowners’ Association requirements, or covenants or conditions specific to the property.
Article 2 – Compensation and Payments
The AIA makes no recommendation as to the appropriateness of any of these methods of compensation on a particular project, nor does the AIA suggest that the foregoing list includes all methods that are possible, practical, or in actual use. The use of any of the compensation methods described below, singly or in combination with other methods, is a business decision for the home builder and the owner. Further, the AIA makes no recommendations and has no guidelines or schedules that specify the amount of compensation a home builder should be paid.
§ 2.1 Compensation for Work Performed Prior to Execution of the Construction Phase Amendment. Because the nature of the home builder’s work will be different before and after execution of the Construction Phase Amendment, A112 provides separate compensation sections for work performed. In Section 2.1, insert the basis of compensation for the home builder’s work before the execution of the Construction Phase Amendment (Note: the Contract Sum, which will address the work following the execution of the Construction Phase Amendment, will be established as part of the Construction Phase Amendment). Sample language is provided below for describing some possible methods of computing compensation for work performed.
Compensation shall be the stipulated sum of ________ ($__).
Multiple of Direct Personnel Expense:
Compensation for services rendered by principals, employees, and professional consultants shall be based on a Multiple of Direct Personnel Expense. Direct Personnel Expense is the direct salaries of the Home Builder’s personnel engaged on the project and the portion of the cost of their mandatory and customary contributions and benefits related thereto, such as employment taxes and other statutory employee benefits, insurance, sick leave, holidays, vacations, pensions, and similar contributions and benefits.
Compensation shall be based on actual costs incurred in the performance of the Preconstruction Phase services. (A maximum cost may be established.)
Professional Fee Plus Expenses:
Compensation shall be a Fixed Fee of ________ ($__), plus compensation for services rendered by Principals, employees, and professional consultants.
Article 13 – Termination of the Contract
§ 13.3.3 Insert the amount of or method for determining the fee payable to the home builder by the owner following termination for the owner’s convenience if any.
Article 14 – Binding Dispute Resolution
Select the method of binding dispute resolution. If the owner and home builder do not select a method of binding dispute resolution or do not subsequently agree in writing to a binding dispute resolution method other than litigation, claims will be resolved in a court of competent jurisdiction.
Article 16 – Insurance
Insert specific insurance requirements for the types of insurance and dollar limits of coverage that the home builder is required to maintain for the project.
Article 17 – Scope of This Agreement
§ 17.2.3 List any other documents that are part of the agreement.
Exhibit A – Construction Phase Amendment
Project and Parties (Cover Page). Identify the project and the parties just as they appear on the cover page of the agreement.
Article A.1 – Contract Sum and Payments
§ A.1.1 A112–2021 is meant to be flexible for the determination of the Contract Sum. The method for determining the contract sum agreed to by the owner and home builder should be described in detail.
§ A.1.3 A112 allows the parties to develop a payment schedule based upon construction milestones. The payment schedule should be provided in detail in this fill point or attached exhibit. If payments are to be made following a schedule established by a construction lender, see section A.1.3.3.
§ A.1.3.1 This section provides the opportunity for the owner to specify any requirements for payment to be made, such as lien releases or other proof of payment to subcontractors or suppliers, third-party inspection requirements, etc.
§ A.1.3.2 Fill in the number of days that payment is due by the owner after notification from the home builder that a payment is due.
Article A.2 – Contract Time
In this article, the dates of commencement of construction and Substantial Completion should be provided.
Article A.3 – Information Upon Which This Amendment is Based
A detailed enumeration of all documents and other information, including agreed-upon deviations from the owner’s criteria, upon which the Construction Phase Amendment is based, must be provided in this article.
§ A.3.1.2 The owner’s selections of specific products and materials should be listed here or in a referenced attached exhibit.
§ A.3.1.4 Agreed-upon allowances should be identified, including a statement of their basis. Unless otherwise provided, allowance amounts do not include the costs for delivery and unloading at the project site, labor, installation, overhead and profit, or similar costs.
§ A.3.1.5 Home builder’s assumptions, exclusions, and clarifications should be listed here or in an attached referenced exhibit.
Executing the Agreement.
The persons executing AIA Document A112–2021 should indicate the capacity in which they are acting (i.e., president, secretary, partner, etc.) and the authority under which they are executing the Agreement. Where appropriate, a copy of the resolution authorizing the individual to act on behalf of the firm or entity should be attached.
Modifications. Particularly concerning professional or contractor licensing laws, building codes, taxes, monetary and interest charges, arbitration, indemnification, format, and font size, AIA Contract Documents may require modification to comply with state or local laws. Users are encouraged to consult an attorney before completing or modifying a document.
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