92442-A Construction Contract Cost Plus

Construction Contract
Cost Plus

U.S. Department of Housing
and Urban Development
Office of Housing
Federal Housing Commissioner

OMB Approval No. 2502-0011 (exp. 9/30/2013)

Public Reporting Burden for this collection is estimated to average 16 hours per response, including the time for reviewing, searching existing
data sources, gathering and maintaining the data needed, and compiling and reviewing the collection of information. Send comments regarding this
burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the Reports Management Officer,
451 7th Street SW, Washington, DC 20410-3600.
The Department of Housing and Urban Development (HUD) is authorized to collect this information by provisions set forth in Article 1.E of the
National Housing Act (Public Law 479, 48 Stat. 1246, 12 U.S.C., 1701 et. seq.). This information is necessary for contractors and mortgagors to obtain
approval from the FHA Commissioner’s to document the terms of any Contract Document, or order for extra work, or change by altering or adding to the
work, or which will change the design concept. The information is used by HUD to ensure that viable projects are being developed. Furnishing of this
information is mandatory, and failure to provide it may result in your not receiving your benefits. This agency may not conduct or sponsor, and a person is
not required to respond to a collection of information unless that collection displays a valid OMB number.
Privacy Act Notice. The United States Department of Housing and Urban Development, Federal Housing Administration, is authorized to
solicit the information requested in this form by virtue of Title 12, United States Code, Section 1701 et seq., and regulations promulgated thereunder at
Title 12, Code of Federal Regulations. While no assurances of confidentiality is pledged to respondents, HUD generally discloses the data only in
response to a Freedom of Information request. This agency may not conduct or sponsor, and a person is not required to respond to, a collection of
information unless that collection displays a valid OMB control number.

This Agreement, made the ____________ day of __________________ 20____, between __________________________________
____________________________________________________________________________ (hereinafter called the “Contractor”) and
____________________________________________________________________________ (hereinafter called the “Owner”).
Witnesseth, that the Contractor and the Owner, for the consideration hereinafter set out, agree as follows:
Article 1: Scope of Contract
A. The Contract between the parties is set forth in the “Contract
Documents,” which consist of this Agreement, the Drawings and
Specifications, which include the current edition of AIA Document
A201, “General Conditions of the Contract for Construction,” and
Form HUD-2554, “Supplementary Conditions of the Contract for
Construction.” The provisions of this instrument and the said HUD
Supplementary Conditions take precedence over all inconsistent
provisions in the said AIA General Conditions. This Contract constitutes the entire agreement between the parties, and any previously
existing contract concerning the work contemplated by the Contract
Documents is hereby revoked.
B. The Contractor shall furnish all of the materials and perform all
of the work (within the property lines) shown on, and in accordance
with, the Drawings and Specifications entitled ______________
_________________________________________________
,
HUD Project No.___________________, dated _______________.
C. The Drawings, which are numbered _____________________,
and the Specifications, the pages of which are numbered___________
_________________________________________________
, _________________________________________________
have been prepared by _______________________________
__________________________________ (“Design Architect”).
The Architect administering the Construction Contract (hereinafter,
and elsewhere in the Contract Documents, referred to as the
“Architect”) is _______________________________________
_________________________________________________
.

Replaces forms FHA-2442A, which is obsolete
Previous editions are obsolete

D. A master set of said Drawings and Specifications, identified by
the parties hereto and by the Design Architect, the Architect, and the
Contractor's Surety or Guarantor have been placed on file with the
Federal Housing Commissioner (hereinafter referred to as the “Commissioner”), and shall govern in all matters which arise with respect
to such Drawings and Specifications.
E. Changes in the Drawings and Specifications or any terms of the
Contract Documents, or orders for extra work, or changes by altering
or adding to the work, or which will change the design concept, may
be effected only with the prior written approval of the Owner's Lender
(more particularly identified below and hereinafter referred to as the
“Lender”) and the Commissioner and under such conditions as either
the Lender or the Commissioner may establish.
Article 2: Time
A. The work to be performed under this Contract shall be commenced within ______ days of this Agreement, and shall be completed by __________________, 20____. The time by which the
work shall be completed may be extended in accordance with the
terms of the said AIA General Conditions only with the prior written
approval of the Commissioner.
B. The Contractor shall correct any defects due to faulty materials
or workmanship which appear within one year from the date of final
completion.
C. If the work is not brought to final completion in accordance with
the Drawings and Specifications, including any authorized changes,
by the date specified above, or by such date to which the contract
time may be extended, the maximum sum stated in Article 3A(1)
below shall be reduced by $_______________, as liquidated damages, for each day of delay until the date of final completion. When
the Owner cost certifies to HUD, the actual cost of interest, taxes,
insurance, mortgage insurance premiums, and construction and
permanent loan extension fees, as approved by the Commissioner,
for the period from the scheduled date of completion through the date
construction was actually completed, shall be determined. The
lesser of the liquidated or actual damages shall be applied. The
applicable amount shall be reduced by the project's net operating
income (as determined by the Commissioner) for the damage period.

Page 1 of 4

form HUD-92442-A (11/00)
ref Handbook 4430.1

D. The Owner and Contractor may amend this contract prior to
initial endorsement (insurance of advances projects) or upon execution of the construction contract (insurance upon completion projects),
in a form prescribed by the Commissioner, to provide for an incentive
payment to the Contractor, which will result in an increase in the
contract sums stated in Article 3A below, if the work is completed
before the date specified in this contract. The Contractor will not be
entitled to any incentive payment resulting from early completion if
HUD determines that the Contractor's cost certification, required by
Article 10, is fraudulent or materially misrepresents the Contractor's
actual cost of construction.
E. The date of final completion shall be the date the HUD representative signs the final HUD Representative's Trip Report provided that
the trip report is subsequently endorsed by the Chief Architect.
Article 3: Contract Sum and Payments
A. (1) Subject to the provisions hereinafter set out, the Owner
shall pay to the Contractor for the performance of this Contract the
following items in cash:
(a) The actual cost of construction as defined in Article 10
below; plus
(b) A fee of $ _____________________.

C. The balance due the Contractor hereunder shall be payable
upon the expiration of 30 days after the work hereunder is fully
completed, provided the following have occurred.
(1) All work hereunder requiring inspection by municipal or
other governmental authorities having jurisdiction has been inspected and approved by such authorities and by the rating or
inspection organization, bureau, association or office having jurisdiction;
(2) All certificates of occupancy, or other approvals, with respect to all units of the project have been issued by State or local
governmental authorities having jurisdiction; and
(3) Permission(s) To Occupy (Form HUD-92485) for all units of
the project have been issued by the Commissioner.
D. With its final application for payment by the Owner, the Contractor shall disclose, on a form prescribed by the Commissioner, all
unpaid obligations contracted in connection with the work performed
under this Contract. The Contractor agrees that within 15 days
following receipt of final payment, it will pay such obligations in cash
and furnish satisfactory evidence of such payment to the Owner.
Article 4—Receipts & Releases of Liens

(a) A note in the form prescribed by the Commissioner in
the amount of $ _______________________ .

The Owner may require the Contractor to attach to each request for
payment its acknowledgement of payment and all subcontractors'
and material supplier's acknowledgements of payment for work done
and materials, equipment and fixtures furnished through the date
covered by the previous payment. Concurrently with the final payment, the Owner may require the Contractor to execute a waiver or
release of lien for all work performed and materials furnished
hereunder, and may require the Contractor to obtain similar waivers
or releases from all subcontractors and material suppliers.

(b)

Article 5—Requirements of Contractor

In no event, however, shall the total cash payable pursuant
to this paragraph (1) exceed $ ____________________.
(2) In addition to any cash fee provided for in paragraph (1), the
Owner shall pay to the Contractor by means other than cash, the
following:

(3) If, upon completion, the Contractor shall have received
cash payments in excess of (a) the actual cost of construction, plus
(b) the cash fee specified in paragraph (1), plus the additional
amount to be paid under the provisions of paragraph (2), all such
excess shall be refunded to the Owner.
B. Each month after the commencement of work hereunder, the
Contractor shall make a monthly request on Form HUD-92448 for
payment by the Owner for work done during the preceding month.
Each request for payment shall be filed at least ___________ days
before the date payment is desired. Subject to the approval of the
Lender and the Commissioner, the Contractor shall be entitled to
payment thereon in an amount equal to (1) the total value of classes
of the work acceptably completed; plus (2) the value of materials and
equipment not incorporated in the work, but delivered to and suitably
stored at the site; plus (3) the value of components stored off-site in
compliance with applicable HUD requirements; less (4) 10 percent
holdback and less prior payments. The “values” of (1), (2) and (3)
shall be computed in accordance with the amounts assigned to
classes of work in the “Contractor's and/or Mortgagor's Cost Breakdown,” attached hereto as Exhibit “A”. The Contractor agrees that no
materials or equipment required by the Specifications will be purchased under a conditional sale contract or with the use of any
security agreement or other vendor's title or lien retention instrument.

Replaces forms FHA-2442A, which is obsolete
Previous editions are obsolete

A. The Contractor shall furnish, at its own expense, all building and
other permits, licenses, tools, equipment and temporary structures
necessary for the construction of the project. The Contractor shall
give all required notices and shall comply with all applicable codes,
laws, ordinances, rules and regulations, and protective covenants,
and with the current regulations of the National Board of Fire
Underwriters, wherever applicable. The Contractor further shall
comply with the provisions of the Occupational Safety and Health Act
of 1970. The Contractor shall immediately notify the Commissioner
of the delivery of all permits, licenses, certificates of inspection,
certificates of occupancy, and any other such certificates and instruments required by law, regardless of to whom issued, and shall
cause them to be displayed to the Commissioner upon his request.
B. If the Contractor observes that the Drawings and Specifications
are at variance with any applicable codes, laws, ordinances, rules or
regulations, or protective covenants, it shall promptly notify the
Architect in writing, and any necessary changes shall be made as
provided in this Contract for changes in the Drawings and Specifications. If the Contractor performs any work knowing it to be contrary
to such codes, laws, ordinances, rules or regulations, or protective
covenants, without giving such notice to the Architect, it shall bear all
costs arising therefrom.

Page 2 of 4

form HUD-92442-A (11/00)
ref Handbook 4430.1

C. Upon completion of construction, the Contractor shall furnish to
the Owner a survey showing the location on the site of all improvements constructed thereon, and showing the location of all water,
sewer, gas and electric lines and mains, and of all existing utility
easements. Such survey shall be prepared by a licensed surveyor
who shall certify that the work is installed and erected entirely upon
the land covered by the mortgage and within any building restriction
lines on said land, and does not overhang or otherwise encroach
upon any easement or right-of-way of others. In addition, the Contractor shall furnish additional surveys when required by the Owner
for any improvements, including structures and utilities, not theretofore located on a survey. The Contractor shall furnish copies of such
survey required hereunder for the Lender and the Commissioner.
D. The Contractor shall assume full responsibility for the maintenance of all landscaping which may be required by the Drawings and
Specifications until such time as both parties to this Contract shall
receive written notice from the Commissioner that such landscaping
has been finally completed. The Owner hereby agrees to make
available to the Contractor, for such purpose, without cost to the
latter, such facilities as water, hose and sprinkler.
Article 6—Assurance of Completion
The Contractor shall furnish to the Owner assurance of completion of
the work in the form of (specify) __________________________

B. The Contractor shall not subcontract all of the work to be
performed hereunder without the prior written consent of the Owner,
the Lender and the Commissioner.
C. Upon request by the Owner, the Lender or the Commissioner,
the Contractor shall disclose the names of all persons with whom it
has contracted or will contract with respect to work to be done and
materials and equipment to be furnished hereunder.
D. The Contractor understands that the work under this contract is
to be financed by a building loan to be secured by a mortgage and
insured by the Commissioner, and that the terms of said loan are set
forth in a Building Loan Agreement between the Owner as Borrower
and___________________________________________________
_________________________________________________
_________________________________________ as Lender.
The Contractor further understands that said Building Loan Agreement provides that, in the event of the failure of the Owner to perform
its obligations to the Lender thereunder, the Lender may, as attorney-in-fact for the Owner, undertake the completion of the project in
accordance with this Contract. In the event the Lender elects not to
undertake such completion, the Contractor's obligations under this
contract shall terminate.

__________________________________________________

Article 10—Certification of Actual Cost

__________________________________________________

A. The “actual cost of construction,” as used in Article 3 above,
shall include all items of cost and expense incurred by the Contractor
in the performance of this Contract, including costs and expenses of
labor, materials for construction, equipment and fixtures, field engineering, sales taxes, workmen's compensation insurance, social
security, public liability insurance, job overhead and all other expenses directly connected with construction, and including general
overhead expenses, but excluding kick-backs, rebates or discounts
received or receivable in connection with the construction of the
project; and excluding any return on or cost of the Contractor's
working capital, such return on or cost of working capital being a part
of or to be paid from the Contractor's fee or profit.

_________________________________________________ .
Such assurance of completion shall run to the Owner and the Lender
as obligees and shall contain a provision whereby the surety agrees
that any claim or right of action that either the Owner or the Lender
might have thereunder may be assigned to the Commissioner.
Article 7—Waiver of Lien or Claim
The Contractor shall not file a mechanic's or materialman's lien or
maintain any claim against the Owner's real estate or improvements
for or on account of any work done, labor performed or materials
furnished under this Contract, and shall include in each subcontract
a clause which shall impose this requirement on the subcontractor.
Article 8—Right of Entry and Interpretation
A. The Lender and its agents or assigns and the Commissioner and
his agents shall, at all times during construction, have the right of
entry and free access to the project and the right to inspect all work
done and materials, equipment and fixtures furnished, installed or
stored in and about the project. For such purpose, the Contractor
shall furnish such enclosed working space as the Lender or Commissioner may require and find acceptable as to location, size, accommodations and furnishings.
B. The Commissioner shall also have the right to interpret the
Contract Documents and to determine compliance therewith.
Article 9—Assignments, Subcontracts and Termination

B. The Contractor shall keep accurate records of account of the
said actual cost of construction, and shall, upon demand, make such
records and invoices, receipts, subcontracts and other information
pertaining to the construction of the project available for inspection
by the Owner and the Commissioner.
C. With its final application for payment, the Contractor shall
furnish to the Owner a completed “Contractor's Certificate of Actual
Cost,” which shall be accompanied and supported by an independent public accountant's certificate as to actual cost (in form acceptable to the Commissioner).
D. The Contractor shall include in all subcontracts, equipment
leases and purchase orders a provision requiring the subcontractor,
equipment lessor or supplier to certify its costs incurred in connection
with the project, in the event the Commissioner determines there is
an identity of interest between either the Owner or the Contractor and
any such subcontractor, equipment lessor or supplier.

A. This Contract shall not be assignable by either party without the
prior written consent of the other party, the Lender and the Commissioner, except that the Owner may assign the Contract, or any rights
hereunder, to the Lender or the Commissioner.

Replaces forms FHA-2442A, which is obsolete
Previous editions are obsolete

Page 3 of 4

form HUD-92442-A (11/00)
ref Handbook 4430.1

In Witness Whereof, the parties to these presents have executed this contract in six (6) counterparts, each of which shall be deemed an original,
in the year and day first above mentioned.

(Seal) Attest:

Owner

Witness

By

Witness

Title

(Seal)

Contractor

Witness

By

Witness

Title

Note: If Contractor or owner is a corporation, Secretary should attest.

Replaces forms FHA-2442A, which is obsolete
Previous editions are obsolete

Page 4 of 4

form HUD-92442-A (11/00)
ref Handbook 4430.1