Contractor background verified
GST registration confirmed, at least two past projects visited or their owners spoken to, and current project load asked and recorded. Over-committed contractors are the top cause of stalled sites.
What to look at
- Whether the project value puts it inside the cess net
- The contractor's registration status where the worker threshold is met
Documents to ask for
- GST registration
How to check it yourself
An establishment employing 10 or more building workers must register under s.7 within 60 days, but the definition excludes an individual constructing his own residence where total cost does not exceed ₹10 lakh. The Welfare Cess Act levies 1 percent of construction cost with the same ₹10 lakh own-residence exemption. So most substantial Kerala houses are within the cess net and the contractor as employer is liable.
Where this comes from: Building and Other Construction Workers (RE&CS) Act 1996 s.7; BOCW Welfare Cess Act 1996 (notification dated 26 September 1996) (required by law)
More construction agreement checks before you sign
- Agreement check passed
- Site handover checklist agreed
- Worker-welfare rules applicability checked
- GST treatment understood before signing
- The payment schedule keeps money back until the end
- The agreement does not contradict itself
- GST is stated, and you know who pays it
- You know who you are contracting with
- Price escalation has a limit you can calculate
- Foundation extras cannot be open-ended
- Curing is the contractor's job, in writing
- The arbitrator is not chosen by the contractor alone
- There is a warranty, and it has a length
- Worker safety stays with the contractor
- Signing for a stage does not sign away everything after it
- There is a way to settle a dispute short of court
- Cancellation terms are not written by one side
- Nobody else builds your house without you knowing
- No blank spaces, no missing dates
- Money goes to the company, not to a person
- You can ask where the money went
- Delay has a consequence for both sides
- The quotation is attached to the agreement
- Force majeure is not a blanket excuse
The whole stage: Construction agreement checks before you sign