How to claim for defects in the renovation or construction of a property

The Civil Code states that “a work is performed if it is completed and handed over“. But what to do if the reconstruction or construction shows major deficiencies? Especially when the Civil Code further complicates the situation as follows: “The client is not entitled to refuse acceptance if the work shows only isolated defects that do not prevent use.” How to resolve such a situation? One of the most important steps is to address acceptance, completion and any claims directly in the contract.

1) Prevention in the form of a detailed works contract

Traditionally, in the contract, the contractor agrees to carry out the work for you and it is your responsibility to accept it and pay the agreed price. However, this is not sufficient. Avoid problems and detail the work = list all the work to be carried out, what the end result should be, and for each activity include the price.

It is the determination of the price and possible multiple works that is crucial and we recommend to focus on it. It is ideal to negotiate payment terms as phased, so that the work already done is always paid for with only a small deposit.

Theattorney advises:“Many companies or tradesmen often argue when placing an order that a contract for work does not have to be in writing according to the law and that an order is sufficient. This may be true, but as the renovation of a house in particular is a complicated job, we recommend insisting on a contract. In this case, the more detailed the work contract is, the less risk of potential disagreements and disputes. It is only in the event of a dispute that a good contract is recognised.”

What else to consider in a works contract drawn up for construction or renovation?

• If the hired company will be hiring other subcontractors, be sure to explicitly agree in the contract that it will be fully responsible for them.
• It is ideal to list the specific contractors who will be working on the construction or renovation in the contract.
• Agree on a timetable for each activity. If deadlines are not met, you can include liquidated damages in the contract. This is very important.
• For construction, use as precise a definition of the work as possible, such as project documentation with a description of materials and procedures. It is ideal to have a binding visualisation done for larger contracts.
• Don’t forget to agree on how the interim inspections and final handover will take place, and write everything down in the contract.
• In practice, we often encounter a lack of wording on whether the works contract includes the procurement of necessary permits or preparatory work. Remember. Particularly for house building, this can be crucial. Sometimes the devil is in the detail, where the land is developable but you cannot, for example, design a building higher than 22 metres on it.

For renovation or construction, it will probably not be advantageous for you to agree to a contract supplied by the building company, craftsman or architects who are doing the work for you. The contract will always be designed to favour them in the event of disputes. Before you sign a contract with a tradesman or company, have it checked by a solicitor who will identify any legal loopholes and draw your attention to them.

However, despite aproperly worded contract, the final work may still be defective. Let’s take a look at what your rights are in such a situation.

2) What steps to take if the construction or renovation is defective?

We mentioned above that, according to the law, you must accept the completed work unless the defects prevent the use of the house or apartment, either functionally or aesthetically.

At that point, you have two options:

• accept the work without reservation,
• accept the work with reservations – you will detail these in the handover report.

There are, of course, obvious defects at this point. In the case of hidden defects (such as a leaking roof or incorrectly chosen tiling adhesive), you have the right to complain about them within 5 years of taking over the building, unless you agree otherwise in the contract. But always claim them without undue delay.

If you take over the work with defects that you report, you are not obliged to pay the price until the defects have been rectified. This applies, of course, unless otherwise agreed in the contract.

3) What can you demand from the contractor in case of defects?

Here, it is necessary to distinguish whether the defect is a material breach of contract (= if you had known about it beforehand, you would not have concluded the contract at all) or whether it is a minor defect.

• In practice, a material defect is e.g. the use of the wrong material (e.g. toxic) or failure to comply with safety standards, which then prevents the approval.
• “An ‘insignificant’ defect is, for example, a minor scuff on the floor or a scratch on the seal, which can be repaired afterwards and does not prevent their use.

It can also be inaccuracies in design, unless the contract clearly specifies that these are essential. Sometimes, for example, the form of the railings in an Art Nouveau villa is a very substantial matter.

So-called legal defects in the work are also often a material defect. Such a defect may be the failure to secure a building permit or the discovery that part of the land is not owned by the developer offering the building.

For material defects, you can ask the contractor to:

• repair,
• a discount,
• replacement work
• or you can cancel the contract and claim a refund.

For minor defects that do not prevent use, you are entitled to:

• repair,
• a discount.

4) Until when can you complain about the construction or reconstruction?

You won’t find a guarantee for renovation or construction in the law, and for this reason it is extremely important to have everything stipulated in the work contract or to have the guarantee covered by a warranty certificate. In this case, the contractor’s guarantee of quality is an undertaking that the building or reconstruction will be fit for use or retain its usual characteristics for a certain period of time.

However, even in situations where you have not stipulated a guarantee in the contract, the contractor is liable for latent defects for a period of 5 years from the handover of the work. This gives you the right to claim the defect.

In practice, we have already dealt with, for example, rotten floors or other subfloors that became apparent only after several years.

5) How long does it take to resolve your claim?

It must not take longer than 30 calendar days to process your complaint, unless the supplier agrees otherwise with you. The defect should also be rectified within this time.

In practice, we often encounter cases where the entrepreneur does not deal with the complaint within the statutory 30-day period and does not agree with you to extend it in any way. At such a time, you have the right to demand a reasonable discount on the price of the building or to withdraw from the contract altogether.

6) What to do if the contractor refuses to deal with the complaint?

If the contractor does not respond or refuses to remedy the defect, you have the right to demand a discount and contract someone else to remedy the defect.

However, you must first serve a notice on the contractor which includes information about exercising the right to a discount on the price of the work. Be sure to state the specific amount. This must be proportionate to the difference between the work that does not have a defect (for example, a precisely done window seal) and the value of the defective work.

However, it may be that the cost of the repair exceeds the agreed discount. In this case, you can claim compensation from the supplier. However, the repair should be in line with normal practice. This is because you cannot claim for a significantly overpriced luxury service when standard quality was originally agreed.

Thelawyer advises, “If the claim is justified, the supplier must reimburse you for all costs associated with the claim. Most often, these are mainly expert reports that support your claim of defects in the construction or renovation.”

7) The company carrying out the construction or renovation has gone bankrupt. What now?

Don’t panic. The law also provides for such situations. Subcontractors may be liable for the work together with the contractor, as well as, for example, construction supervisors or suppliers of construction documentation. It depends on the contract setting. You can often claim damages directly from them. However, this once again comes back to a flawless works contract and the importance of listing all companies and tradesmen involved in the renovation or construction.

The managing director(s) of the contractor’s company may also be liable directly, but it depends on the particular circumstances.

It is not only the last point but all of the above that show the importance of the works contract itself. It can either save you a lot of trouble or, on the contrary, favour the contractor who will carry out the renovation or construction, and even then you will have a hard time claiming your rights. So start with it and have it checked by a solicitor before you sign it.