As you try to decipher the contract for your new kitchen remodeling project, you come across several terms that seem foreign. Here's how to decipher a few common terms.

What's a Lien?

A lien is a legal claim that can be filed against your property by someone who has provided work or materials.

The problem with liens are:

• they can be difficult to remove, particularly if the person who filed it can not be located
• you won't know it's there until someone does a title search on your property. Just what you want when you're trying to refinance your mortgage or sell your house

Why Do You Need a Lien Waiver?

Lien waivers protect you from liability for unpaid bills to subcontractors and suppliers. If you pay a contractor for doing work on your house and he doesn't pay the electricians, plumbers, and other subcontractors, they might look to you for payment. If you don't have a lien waiver you could have a complicated court battle ahead.

The contract should include a list of the subcontractors and suppliers who will be providing the labor and supplies. Before making a final payment to the contractor, check to make sure each subcontractor and supplier has signed a lien waiver.

The contractor also should sign a lien waiver for his portion of the work. It should state that all subcontractors and suppliers have been paid. In essence, they are all acknowledging that you have paid for their services.

What's My Allowance?

Some contractors add a dollar amount into the contract to cover the cost of various products and finishes, such as lighting, carpeting, and faucets. You then have an allowance to spend in each area. If you select products that cost more than the allowance, you have to pay the difference.

Some contractors will reduce the amount of their allowances to try to lower the overall bid on the project, said John Sylvestre, owner of Sylvestre Construction, Inc. in Minneapolis. Home owners who are selecting a contractor based on a low bid may be surprised to find that the tile they want will cost three times what the contractor included as an allowance.

This provides home owners with unrealistic expectations about what the project will cost and what level of quality they will get for that cost. “A contractor that provides realistic allowances may not be as inexpensive as they want,” he said. “They should ask what the allowance will really provide.”

Ask the contractor:

• What store sells the type of carpeting I want for the $20 a yard allowance listed in the contract?
• Do most of your customers find the products they want without spending more than the allowance?
• Are your allowances realistic given my taste and budget?

If the contractor is using a general formula for the allowance, it may be too generic to match your tastes. “A faucet for a kitchen sink can cost from $60 to $700,” Sylvestre said. “Where do you want to be?”