What do the terms on a builder's estimate, contract and permit paperwork mean?

Published September 28, 2026

Summary

Most of these words have an official meaning somewhere, and it depends on who's using them. A "contract price" in Census Bureau data, for example, is the price on the original contract, before any change orders and without the land. The definitions below come from the agency or organization that uses each term, and each entry says which one.

Contracts and payments

Change order. The signed paper that alters the work once the contract is in place, with the price adjustment written in. The California Contractors State License Board (CSLB) treats a signed change order as part of the written contract. The AIA's G701 version carries three signatures, the owner's, the architect's and the contractor's, and records their agreement on any adjustment to the contract sum and the schedule.
Contingency. Money set aside inside the contract, as a dollar figure or a percentage, for what nobody could predict: mistakes or gaps in the drawings, scope changes, conditions no one could see before work began (American Institute of Architects).
Contract price. The price on the original contract awarded to the general contractor. It generally doesn't reflect later change orders or separate contracts for grounds work, and it doesn't include the land (Census Bureau).
Closing costs. Fees for the final property transfer that aren't part of the price, such as loan origination fees, appraisal, survey, title insurance and legal fees, typically 2% to 6% of the purchase price (HUD).
Escrow. Upfront payments held by a third party until the deal closes, which protects everyone in the transaction (HUD).

When someone doesn't get paid

Lien. A legal claim against a property that secures it as collateral if a debtor doesn't meet loan obligations; it has to be settled before ownership can transfer (HUD).
Mechanics lien. A claim recorded with the county by anyone who worked on or supplied the job and wasn't paid, from the builder down to a laborer. The CSLB calls it a "hold" on the property; left unpaid, it can end in foreclosure.
Preliminary Notice. The notice a subcontractor or supplier sends the owner to keep its lien rights alive. It can go out any time from before the work or delivery until 20 days after, and skipping it forfeits the right to file (CSLB).
Conditional and unconditional release. Lien waivers collected before and after each payment. A conditional release only takes effect once the claimant is actually paid (CSLB).

On the job site

Rough-in. The stage, and the inspection, when wiring or plumbing that will be hidden in walls and floors is installed. In Raleigh, North Carolina, electrical rough-in is requested once wiring, boxes and panel boards are in, and plumbing rough-in once all concealed plumbing that can be done before fixtures is installed.
Certificate of occupancy (CO). Issued when a building has passed all inspections; a new building can't legally be occupied without one. A temporary CO expires after 30 days (City of Raleigh).
Rater. The third-party verifier who inspects and tests a home for energy certification, a Certified Rater or Approved Inspector under ANSI/RESNET/ICC Standard 301 (DOE Efficient New Homes).
U-factor. Heat transfer through a window per unit of time, area and temperature difference; lower is better. SHGC (solar heat gain coefficient) is the share of solar radiation hitting the window that ends up as heat inside (ENERGY STAR, based on NFRC definitions).

How the house gets built, and how big it is

Census sorts houses built on the owner's land into two groups. A contractor-built house is built under one general contractor; an owner-built house is built with the owner acting as general contractor, whether the owner does part of the work, hires subcontractors for all of it, or occasionally does it all. Floor area, in Census terms, is completely finished floor space measured from the outside, including finished basements and attics but not garages, carports, porches or unfinished areas.

Factory-built housing has three labels that get mixed up. A manufactured home is defined in federal regulation (24 CFR 3280.2) as a structure transportable in one or more sections that is at least 8 body feet wide or 40 body feet long when moving, or at least 320 square feet when set up, built on a permanent chassis and designed as a dwelling with or without a permanent foundation. HUD counts factory-built homes built after June 15, 1976 under the HUD Code as manufactured homes, and calls the ones built before that date mobile homes. A modular home is built as finished three-dimensional sections in a factory and joined on a permanent foundation at the site (Census), and it follows state and local building codes instead of the HUD Code (HUD).