Housing developer’s risk with contracting

Property development can be contractually organized in several ways. A common way is that the developer (builder) enters into a contract contractor according to NS 8407 for contracting and NS 8405 for contracting, and that the contractor himself enters into contracts with subcontractors for the subjects that the contractor himself does not cover.

Furthermore, the client will normally enter into sales / purchase agreements for the homes with the buyers. The buyers are usually consumers, and the purchase of housing during construction, is regulated by the Bus Administration Act (buofl). Buofl. is established to regulate the relationship between the client and the consumer, and establish an indispensable protection for the benefit of the consumer. This puts the client at risk not being able to continue any default claims against the contractor, though the basis for the claims is due to the contractor. The reason is that the consumer’s and the rights and obligations of the builder against each other do not coincide with contractor and client according to NS 8407 and NS 8405.

There are several differences between consumer rights and developer to the contractor. This applies, among other things, to the complaints rules, the conditions for promoting default claims, and the measurement of default claims. If no special adjustments are made in the relationship between the developer and the contractor, the builder may be at risk of default.

Measures that should is considered to reduce the housing developer’s risk

Since there is a difference in the rules according to buofl. and the standard contracts will basically be a desire for the developer to have as much back-to-back as possible between contractual relationships. Back-to-back implies that the agreements in practice become more or less coincidental, so risk The developer has vis-à-vis the buyer fully or partially transferable to the contractor.

In practice, it is rarely seen that all risk is transferred. The reason until it is probably complex, but risk will most often have to be compensated. On it on the other hand, the builder has no need to transfer risk he himself is capable of to deal with, and risks that are unlikely to manifest.

The most important thing for the builder is that the contractor is committed to deliver the same as the builder is obliged to the buyers. The applies to both the quality and scope of the delivery, and to regulate it coincidence between what the developer may require under the contract and the developer is obliged to according to the sales / purchase agreement.

Harmonization must be regulated in the contract. One contract technique that can be used is to make a general provision that provides the builder has the right to carry forward some or all of the requirements of the buyers against the developer and which is due to the contractor’s execution of the contract object. It may also be appropriate, for example, to regulate responsibility for changes / options, adjustments to the claims and limitation periods, daily fines requirements and withholding amount.