The Change Order Clause: What Your Construction Contract Should Say
A change order construction contract clause should say that every change to the work must be in writing and signed by both parties before the work is performed, and it should spell out how changes are priced, when they’re paid, how they affect the schedule, and who is allowed to approve them. If your contract only says “changes must be in writing,” you have about a fifth of a clause. The rest gets negotiated in the field, under pressure, one change at a time.
I think of the change order clause as the rulebook for the part of the job nobody planned. You write it when everyone is still friendly, so you don’t have to invent it when they aren’t. One caveat up front: I’m a builder, not a lawyer. Contract law varies by state, so have a construction attorney in your state draft or review the actual language.
What is a change order in a construction contract?
A change order in a construction contract is the mechanism the contract provides for modifying the scope, price, or schedule after signing. The contract fixes what you’re building and for how much. The change order clause explains how either of those can legally move.
Without that mechanism, every change is technically a new negotiation with no agreed rules. With it, a change is paperwork. Boring paperwork is the goal.
What should a change order clause include?
A solid clause answers nine questions before anyone has to ask them:
What counts as a change. Any deviation from the signed plans and specifications, including additions, deletions, substitutions, and no-cost changes.
The writing requirement. No change is valid, and no changed work begins, until a written change order is signed by both parties.
Who can authorize. Name the people. On the client side, usually every person who signed the contract. On your side, a specific person, which is not the framer.
How changes are priced. Direct cost plus a stated markup, plus any administrative fee, in actual numbers. See change order markup for how to set them.
How credits are calculated. Whether deleted work is credited at cost only or cost plus some portion of markup.
When changes are paid. I’m a strong believer in payment at signing, before the work is done, instead of rolling changes into the final draw.
Schedule adjustments. Each change order states the days added, and the completion date moves by that amount.
Pricing and decision time. Whether you charge for pricing a change the client then declines, and how long a quoted price stays valid.
Emergencies. What you’re allowed to do without a signature when waiting would damage the home or put someone at risk.
The clause sets the rules, and the form applies them. Our Custom Home Change Order Template is the form side of that pair, with a guide to running the system.
Are verbal change orders enforceable?
Sometimes, and you don’t want to be the one finding out. Whether verbal change orders hold up depends on your contract, your state, and what the two sides actually did. In general terms, courts in some places have enforced verbal changes even when the contract required writing, particularly where both parties had a habit of ignoring the requirement. Ask your attorney how that works where you build.
The practical lesson is that your clause is only as strong as your behavior. If you do the first three changes on a handshake and then insist on paper for the fourth, you’ve weakened your own contract. To protect the writing requirement:
Never start changed work without the signed form. Not once, not for the nice clients.
Tell your trades the same rule. Client requests made on site go to you, not into the wall.
Document the free ones too. A zero-cost change order keeps the habit intact.
Ask your attorney about a non-waiver sentence. Language saying that letting one change slide doesn’t waive the requirement for the rest.
Who pays for change orders?
Whoever caused the change, and your contract should say so for each category. I’d break it into four:
Client-requested changes. The client pays cost, markup, and any fee.
Builder errors. The builder pays. If you framed it wrong, that’s your change order to yourself.
Unforeseen conditions. Rock, bad soil, buried debris, an unmarked utility. This is the category that causes real fights, so the contract needs to say plainly whether these costs are the owner’s, usually as a change order or out of a contingency.
Code and third-party requirements. An inspector, engineer, or HOA requires something that wasn’t on the plans. Decide in the contract, not at the inspection.
Design errors and omissions are a fifth category when an architect is involved. If the plans were the owner’s and the plans were wrong, the cost of fixing that typically isn’t the builder’s, but your contract should say it out loud.
How should the clause handle allowances and selections?
Treat allowance overages as change orders. An allowance is a placeholder in the contract price. When the client’s selection costs more than the placeholder, the contract price changes, and anything that changes the contract price should be signed.
The clause should state how overages and underages are calculated, whether markup applies to the difference, and that overages are paid when the selection is approved. Otherwise the allowances quietly turn into a tab that gets settled at closing, which is the worst possible time to hand someone a bill.
How do you make the clause work on the job?
A clause nobody remembers doesn’t protect you. Three habits make it real:
Walk the client through it before signing. Out loud, with an example. Clients who understand the rules up front rarely fight them later.
Use one form, every time. Same layout, sequential numbers, a running contract total.
Keep a log. Every change order, its status, its amount, and whether it’s been paid.
For the step-by-step process, see how to write a construction change order.
Frequently asked questions
Does a construction contract need a change order clause?
It should have one. Without it, there’s no agreed method for pricing, approving, or paying for changes, and every change becomes its own negotiation.
Can a contractor charge for a change order that wasn’t signed?
It depends on the contract and state law, and it’s an uphill argument. If your contract requires signed change orders and you skipped that step, talk to your attorney, then fix the habit.
Is a text or email a valid change order?
It may count as evidence of an agreement in some situations, but it usually doesn’t meet a contract’s requirement for a signed change order. Use the message as the request and still issue the form.
Can a builder refuse a change the client wants?
Generally the builder and client have to agree on a change order for it to take effect, so a builder can decline or price a change accordingly. Check your contract, since some forms let the owner direct changes.
BTW, if your contract has the clause but you still need the form and the process that go with it, grab our Custom Home Change Order Template over at the Building Optimal Shop, where you can check out the rest of our swag to build a better business. Proceeds go to benefit, Exponencialistas, my non-profit investing in entrepreneurs transforming their communities in Latin America.