Spec Home Design Fee

[DRyeHD]

I've been staying away from doing spec homes for builders but have agreed to work with a builder to do his.  For a custom home, I typically charge by the square foot (under roof) and by the hour for over three revisions.  Revisions would include minor square footage changes, changing elevations, etc.

 

I saw somewhere that a designer added a set fee for a spec home and gave the builder sole rights to build as many as he wanted.  I don't want to have to track how many times the builder uses the plan.

 

Here are questions for which I'd like to get some input:

1) Should I give a builder sole rights to a design?

2) If so, is an added fee the best way to do it?

3) If anyone does this, what verbage to you use to convey this situation to the builder and on the drawings?

 

Thanks in advance for any input!

[Doug_N]

1 hour ago, DRyeHD said:

I've been staying away from doing spec homes for builders but have agreed to work with a builder to do his.  For a custom home, I typically charge by the square foot (under roof) and by the hour for over three revisions.  Revisions would include minor square footage changes, changing elevations, etc.

 

I saw somewhere that a designer added a set fee for a spec home and gave the builder sole rights to build as many as he wanted.  I don't want to have to track how many times the builder uses the plan.

 

Here are questions for which I'd like to get some input:

1) Should I give a builder sole rights to a design?

2) If so, is an added fee the best way to do it?

3) If anyone does this, what verbage to you use to convey this situation to the builder and on the drawings?

 

Thanks in advance for any input!

My practice is on Ontario Canada.  Most of my work is Toronto and the Greater Toronto Area.  Here you must be a certified designer, architect or an engineer, do design work, be incorporated if you deal with the public (including builders) and be responsible for the design.  Because of that, I would never allow a builder to take my design and use it for more than one building unless the builder retained me to certify each copy for each building.  No two buildings get built the same way, there are room changes, differences in grade and slope and so on.  My designs are also insured to make sure that if I am in error, the resulting costs to cover the blow back is covered (subject to a deductible of course)

 

On every page of each drawing is the following text:

© MEASURITE, ALL RIGHTS RESERVED, DUPLICATION AND DISTRIBUTION OF THIS PLAN WITHOUT WRITTEN PERMISSION IS PROHIBITED

 

In the Scope of Work Agreement the following paragraph is included:
 

19. Proprietary Information.

The work done by the Designer is for the use of the Client for one building in a specific location.  This agreement does not transfer the copyright of the design to the Client beyond the use for construction or renovation of the building or buildings at one specific location.  The Client may make sufficient copies of the documents to convey information to contractors, suppliers and the municipality as required for the project.  The use of design information on any other structure or in any other location is a direct violation of the copyright.

[CharlesVolz]

2 hours ago, DRyeHD said:

1) Should I give a builder sole rights to a design?

No. That means that you could not sell that plan to others or build it yourself. You could be in future litigation with that same builder over various aspects of the design.

 

I say this knowing that a builder is not going to make you rich enough to be worth it.

[Doug_N]

31 minutes ago, CharlesVolz said:

No. That means that you could not sell that plan to others or build it yourself. You could be in future litigation with that same builder over various aspects of the design.

 

I say this knowing that a builder is not going to make you rich enough to be worth it.

You make a very good point in your post.

[joey_martin]

I'm gonna be honest here, and it's an unpopular opinion but....

 

If this is a builder that brings plenty of work into my office, I am not getting into a pissing match over a spec set of plans and how many times it gets built. I am going to sit down and have a very, very, honest conversation with him/her about making sure when a homeowner walks into his office, I am the next call. I have even "spec'ed" the design fees on spec homes until it sells in order to secure more work coming into my office that I don't have to chase. My billings have increased 4 years in a row now after being flat for a few years, and I honestly think it's because I stopped sweating stuff like this. 

 

I make it very clear that the street goes both ways. When homeowners come into my office to have a home designed and built, there are a select few builders that get an early look at the plans and a copy of the materials list to help them get a jump start on pricing, because they do the same for me. About half my work is homeowners coming without a builder so I have plenty of leads for them, as long as I get plenty of leads back. 

 

Do what feels right for you and the relationship you have with that builder.

[DRyeHD]

@Doug_N, @CharlesVolz, and @joey_martin you all make good points and the consensus is to not give a builder sole rights to a design.  Thank you for your input.