Vendor Agreement Templates

Writing a scope of work that prevents disputes

Most arguments with contractors are not about quality. They are about what was included. “Fix the bathroom” means one thing to you and another to the person quoting the job. A good scope of work reads like a checklist that a stranger could use to decide whether the job is finished.

• Location and quantity. “Replace 2 bedroom doors (Unit B, bedrooms 1 and 2) with 30-inch prehung hollow-core doors, including hardware.”
• Materials and who supplies them. Brand, model or a stated allowance (“fixture allowance $250; owner pays any difference”).
• What is excluded. Painting, drywall beyond the opening, haul-away, permit fees. Exclusions are where surprise bills come from.
• Permits and inspections. Who pulls the permit, who pays for it, and that the job is not complete until it passes final inspection.
• Site rules. Working hours, how tenants are notified, where materials can be stored, clean-up standard and debris removal.
• Completion standard. “Complete” means passed inspection, area broom-clean, debris removed and photos sent.

Add a change-order clause: no extra work is billable unless both of you sign a written change order with a price before the work is done. A text message saying “OK go ahead” with a dollar amount is better than nothing, but a signed form is better still.

Payment terms that keep both sides honest

Tie payments to progress you can see, not to the calendar. For small jobs, pay on completion. For larger jobs, a common structure is a modest deposit for materials, one or two progress payments at defined milestones, and a final payment after the work passes inspection and you have the paperwork you need.

• Keep deposits modest. A deposit should cover materials ordered for your job, not the whole contract. Some states cap home-improvement deposits; check your state contractor board before agreeing to a large upfront payment.
• Define milestones objectively. “Rough plumbing passed inspection” is a milestone. “Halfway done” is not.
• Hold back the last payment until final inspection, a walk-through, and receipt of lien waivers (see below) and warranty paperwork.
• Pay traceably. Check, ACH or card, never untraceable cash. You need the record for your books and for any 1099.
• State invoice terms. Net 15 or net 30, what an invoice must show (dates, unit, line items) and any late-payment terms.

License and insurance checks before work starts

Verify the license yourself

Most states license general contractors and trades such as electrical, plumbing and HVAC, and many run a free online lookup through the state contractor board or licensing agency. Search by name or license number and confirm three things: the license is active, it covers the type of work you are hiring for, and the name matches the business on your contract. Some states also show complaints and disciplinary actions.

Thresholds differ widely. In California, for example, the “minor work” exemption in Business and Professions Code § 7048 only covers jobs under $1,000 in total labor and materials that do not need a building permit, and splitting a job into smaller contracts to stay under the limit does not count. Check your own state’s rule before hiring an unlicensed handyman for anything beyond small repairs.

Get a certificate of insurance (COI) directly from the insurer or agent

A certificate of insurance is a one-page summary of a vendor’s policies. Ask for it to be sent to you by the vendor’s insurance agent rather than forwarded by the vendor, because a forwarded PDF can be out of date. When it arrives, check:

• General liability limits that meet your agreement (state a minimum in the contract and confirm it with your own insurer).
• Workers’ compensation if the vendor has employees. If an uninsured worker is injured on your property, the claim may land on you or your insurer.
• Commercial auto for vendors who drive to your property, and professional liability where relevant (for example, property managers).
• Policy dates. The policy must be in force for the whole job. Calendar the expiry date for recurring vendors and request a renewal certificate.
• Named insured matches the business on your contract.

Ask to be named as an additional insured

Being listed as an additional insured on the vendor’s general liability policy means that if a claim arises from the vendor’s work, you can be covered under their policy rather than relying only on yours. Note that a COI by itself does not grant coverage; the endorsement on the policy does. Ask for a copy of the additional-insured endorsement for significant jobs, and put the requirement in your contract so it is a condition of starting work. Your own landlord policy and your agent can tell you what limits make sense for your properties.

Form W-9 and Form 1099-NEC: what changed for 2026

Collect a signed Form W-9 from every vendor before you pay them. It gives you their legal name, tax classification and taxpayer identification number (TIN), which you need if you have to file a Form 1099. Asking after the job is done, when you have no leverage, is the most common reason landlords end up chasing vendors in January.

The reporting threshold is now $2,000

For many years the Form 1099-NEC threshold was $600. Public Law 119-21 (the 2025 budget reconciliation act often called the One Big Beautiful Bill Act) raised it. According to the IRS’s Instructions for Forms 1099-MISC and 1099-NEC, for tax years beginning after 2025 the minimum threshold for reporting nonemployee compensation increased to $2,000, and it may be adjusted for inflation beginning in 2027. So for payments you make during calendar year 2026, you generally file a 1099-NEC for a vendor only if you paid them $2,000 or more for services during the year. Payments made in 2025 (reported in early 2026) still used the old $600 threshold.

Under the IRS instructions, a payment is generally reportable as nonemployee compensation when all four conditions are met:

• you paid someone who is not your employee;
• the payment was for services in the course of your trade or business;
• the payee is an individual, partnership or estate (or, in some cases, a corporation); and
• you paid that payee at least $2,000 during the year.

Common exceptions that matter to landlords

• Corporations. Payments to a corporation, including an LLC taxed as a C or S corporation, generally are not reportable. Legal fees paid to an attorney are the main exception. The W-9 tells you how the vendor is classified.
• Merchandise. Payments for goods only (materials bought from a supplier) are not reportable. But when a non-corporate contractor supplies parts or materials as part of a repair, the IRS instructions say to report the payment for services including those parts and materials.
• Card and payment-app payments. Payments made by credit card or through a third-party payment network are reported by the payment processor on Form 1099-K, not by you on Form 1099-NEC.
• Attorneys. Gross proceeds of at least $600 paid to an attorney (for example, in a settlement) are still reported on Form 1099-MISC box 10.

Deadlines and penalties. Form 1099-NEC is due to the IRS and to the vendor by January 31 of the following year (IRC § 6071(c)), on paper or electronically. If a vendor will not give you a TIN, the rules on backup withholding can require you to withhold 24% from payments; see the IRS’s General Instructions for Certain Information Returns.

Is your rental a “trade or business”? The 1099 rules apply only to payments made in the course of a trade or business; personal payments are not reportable. Whether a small rental activity counts is a fact-specific question, and Schedule E asks every rental filer whether they made payments that required a 1099. Ask your tax preparer and be consistent. For more on rental taxes, see the tax deduction checklist and the tax strategy guide.

Worked example: which vendors get a 1099-NEC for 2026?

Illustrative example. A landlord who owns a duplex as a rental business pays the following during calendar year 2026. All payments were by check or ACH unless noted.

Look closely at the landscaper. The total is $2,600, but only $1,400 was paid by check. Card payments are excluded from your 1099-NEC, so the reportable amount is $1,400, which is below $2,000: no 1099-NEC is required for that vendor. The plumber is the only one who gets a form. Under the old $600 rule the handyman and the landscaper would both likely have needed one, which is why it is worth re-checking your vendor list for 2026 rather than repeating last year’s filings.

Lien waivers: get them before the final payment

In every state, contractors and suppliers who improve real property can have some form of mechanic’s lien right if they are not paid. The surprise for many owners is that a subcontractor or supplier your contractor failed to pay may be able to lien your property even though you paid the contractor in full. A lien waiver is a signed statement that the claimant gives up lien rights for a stated amount of work.

• Conditional waivers take effect only when the payment actually clears. Use these when you hand over a check.
• Unconditional waivers take effect immediately. Accept these only after you know the payment has been received.
• Progress vs. final. Progress waivers cover work through a date; final waivers cover the whole job.

Rules vary a lot. Some states, such as California, prescribe exact statutory waiver forms (see Cal. Civ. Code § 8132 and the sections that follow it), and a waiver that does not follow the form may be unenforceable. Others have preliminary notice requirements or deadlines. For jobs with subcontractors or large material orders, collect waivers from the contractor and from major subs and suppliers, and ask a local attorney or title company which forms your state uses.

Warranties: what to ask for and how to keep them

There are usually two warranties on a repair: the manufacturer’s warranty on equipment (a water heater, a furnace) and the contractor’s warranty on their labor. Your agreement should state the labor warranty period in writing, what it covers (defects in workmanship), what it excludes (tenant damage, lack of maintenance), how you report a claim and how quickly the vendor must respond.

• Ask the vendor to register equipment warranties in the owner’s name, not theirs, and to give you model and serial numbers.
• Keep invoices, photos and warranty documents together by property and unit, so a future buyer or manager can find them.
• Some manufacturer warranties require licensed installation or annual servicing. Check before you let an unlicensed handyman install equipment.
• Note warranty expiry dates in your maintenance checklist so you inspect before coverage ends.

Vendor vetting checklist

Run through this list for every new vendor. It takes under an hour, and most of it is a one-time setup.

1. Get at least two written quotes for any job over a few hundred dollars, based on the same scope of work.
2. Look up the license on your state’s official licensing site; confirm it is active and covers this trade.
3. Receive a COI from the insurance agent showing liability and workers’ compensation, with you as certificate holder (and additional insured for larger jobs).
4. Collect a signed W-9 before the first payment.
5. Call two recent references for similar work, ideally other rental owners, and ask whether the job finished on time and on budget.
6. Check reviews and complaint records with your state licensing board and local consumer protection office.
7. Confirm who will actually do the work (employees or subcontractors) and who supervises them.
8. Agree how the vendor contacts tenants, gets access and handles keys. Make sure tenant notice is given as your state requires; see the state legal guides.
9. Sign a written agreement with scope, price, schedule, change-order process, insurance, warranty and termination terms.
10. Set the payment schedule so the final payment follows inspection, walk-through and lien waivers.

Red flags that should stop the hire

• Large cash deposit up front, or pressure to pay in cash “to save on tax.”
• No written quote, or a quote with no line items and no exclusions.
• Won’t provide a license number or COI, or sends an old certificate with expired dates.
• Suggests skipping permits for work that needs one. Unpermitted work can complicate insurance claims, refinancing and a future sale.
• Refuses to sign a W-9 or asks to be paid under a different name than the one on the contract.
• Door-to-door or storm-chasing offers after a weather event, especially with “today only” pricing.
• Vague answers about who will do the work, or a different crew every visit with no supervisor.
• Discourages you from talking to tenants or wants unsupervised access without notice.

Common mistakes landlords make with vendors

• Relying on a verbal quote and then disputing the final bill with nothing in writing.
• Paying the full price before the job passes inspection, which removes your only leverage.
• Accepting a COI from the vendor’s email instead of their agent, and never checking it again.
• Filing 1099s by habit at the old $600 level, or forgetting to file for vendors paid $2,000 or more by check.
• Losing warranty paperwork, then paying for a repair that was covered.
• Letting a vendor enter an occupied unit without the notice your state and lease require.

Good vendor records also matter when you sell. Buyers and their inspectors ask about permits, roof and HVAC ages and warranties; documented work supports your price. If you are weighing a sale against keeping the property, the keep-or-sell rental property calculator lets you compare the after-tax outcomes, and the rehab estimator helps you budget a project before you collect quotes.