The allowance on your estimate is not a price

Good morning. That figure is not what the tile will cost. It is what the contractor has guessed the tile might cost, written down so the estimate can be totalled, and it is called an allowance.

Nothing on the page says so. It sits in the same column as the real numbers, formatted the same way, and the only thing marking it out is a word most people read past.

Oregon's contractors board defines it in one sentence, and I have not found a clearer one: a line item for a specific fixture or appliance, with an estimated cost, and if the item comes in over that amount the contractor will require you to pay the difference.

Allowances exist because you have not chosen the tile yet. The job has to be priced before you walk into a showroom, so a placeholder goes in and the total gets printed. That is reasonable and it is how the trade works.

The difficulty is arithmetic. You are shown a total that feels like a quotation, you agree to it, and then the part of it that was a guess turns into a bill.

On larger contracts the overage runs through as a change order, signed and billed. On smaller jobs some contractors hold the overages and put them all on the final invoice, which is legal where the contract says so and is how people end up surprised at the end rather than in the middle.

The second paragraph worth finding is the one about concealed conditions. Most contractor agreements carry one, and its job is to move the cost of what turns up behind the plaster onto you.

The wording runs along the lines that the agreement is based on what the contractor could observe with the structure in its condition at the time of bidding, and that anything concealed which comes to light afterwards becomes additional work.

That clause has a limit, though, and few homeowners are ever told what it is. The limit is the inspection.

Courts have generally held contractors responsible for what they should have known had they inspected the site thoroughly, following customary trade practice. Even where a concealed conditions clause exists, a contractor who ought to have found the problem before bidding can still be ruled against. And where no such clause exists at all, courts have generally supported the owner, provided the owner did not sit on what they knew. If you are aware the foundation is settling, you have to say so.

A firm that writes these contracts for a living sets out five causes of change orders, and says only two of them are genuinely unavoidable. The other three are made before anybody picks up a tool.

Three of those five are settled at the kitchen table before the contract is signed, which is the only moment when they cost nothing to fix.

I spent thirty years writing estimates that contractors then worked against, which means I read their paperwork constantly and my own almost never. When I had the back room done in 2018 I signed what was put in front of me at a kitchen table, in about ninety seconds, and I could not tell you today whether it had a concealed conditions clause in it.

Tomorrow: water, which does more damage to American houses than fire does, and the single word in your policy that decides whether any of it is paid for.