Don't Skip the Fine Print: 4 High-Risk Clauses AI Will Flag in Your Next Contractor Contract
- Aaron Husak
- Dec 4, 2025
- 2 min read
TL;DR (Too Long; Didn't Read)
Indemnity: AI flags clauses that make the homeowner liable for contractor negligence.
Payment Traps: The AI looks for "pay-when-paid" or unusually large upfront deposits in your Next Contractor Contract.
Arbitration: It highlights dispute clauses that limit your legal options to costly or unfair methods.
Actionable Tip: If the AI flags a term as "non-standard" or "high-risk," ask the contractor to use a state-mandated or industry-standard version instead.
Why is Manually Reviewing Fine Print a Major Risk for Homeowners?
Most homeowners do not have a legal background and gloss over dense, technical language, especially when excited to start a project. Contractors often use templates designed to maximize their protection and minimize yours. This is where AI excels, identifying unfair liability shifts and ambiguous language in your Next Contractor Contract.
What are the 2 Most Important Risk Flags Related to Payment Terms?
The two most common and critical payment flags are:
Large Upfront Deposits: AI will flag any deposit exceeding 10% or a state's legal maximum.
"Pay-When-Paid" Clauses: AI flags this because it means the contractor only pays subcontractors after you pay them, potentially causing mechanics' liens on your property if they fail to pay.
How Does AI Identify "One-Sided" Indemnity and Liability Clauses?
A contract should allocate risk fairly. AI identifies one-sided clauses that attempt to hold the homeowner responsible for damage or injury caused by the contractor's own team or subcontractors. The AI reports on the degree of indemnification, alerting the homeowner to clauses that are far outside industry norms.
What Should I Do If AI Flags the Dispute Resolution Clause?
Dispute resolution dictates how disagreements are settled (mediation, arbitration, or court). AI will flag clauses that mandate binding arbitration in a location far from your home or require you to pay all legal fees. These are often costly and unfair terms that should be negotiated before signing your Next Contractor Contract.
Comments