OF all of the contracts related to Spanish real estate law that we handle in our law firm, without a doubt, one of the most complicated and the one which generate the most conflicts, is ae contract for the construction of homes or properties in Spain.
This type of contract can be worded in many different ways, so it can be a building or work contract with or without supply of materials, a turnkey contract, a construction contract at a fixed price, a building contract by administration, etc.
The difficulty arising from this type of contract is due to the fact that the construction process has obvious and inherent risk elements, which can lead to a conflict such as: land type, unforeseen events, price variations, dependence on other trades or subcontractors, dependence on administrations i.e. for obtaining licenses, etc.
If you are a builder, project manager, or if you are a plot owner (promoter) there are a large number of components that you must take into account before signing a construction or building contract:
Chose the correct type of building contract. As we have indicated before, building contracts for construction can be of many types and it is important to determine which of them is the correct one for your needs.
Determination of price, costs and method of payment. Obviously it is very important to determine the price and the costs that each of the parties will assume and it is vital to establish how the cost will be paid (e.g. if it will be paid monthly, as the work progresses, or another formula).
Conflict resolution. It is almost inevitable that either during the construction process or at the end of it, some differences or disputes between the builder and the developer in terms of finishes, construction solutions, etc. will arise.
It is imperative therefore that the parties establish a way to solve these controversies: possibly according to the standards laid down by the architect, naming an external expert or another option.
Deadlines and whether penalties apply. An essential element of a building contract is to fix the term, that is a date for the completion of the work. Should this period be missed, then financial penalties for delays may be part of the contract, although it is common to distinguish between delays that are the responsibility of the constructor or the project manager and those that depend on third parties.
The most typical reason for delay is in obtaining the necessary licenses from public administrations, especially Town Halls.
OBJECT OF THE WORKS. PROJECT. MATERIALS.
What is undoubtedly the most difficult to clearly establish in a building contract is precisely the object of the contract itself.
It should clearly detail the work to be done and also in what form, specifying the type of materials, qualities, dimensions, etc. which can obviously be quite complicated.
For all these reasons, and given the difficulty of this type of contracts, it is highly recommended, whether you own a plot and want to build on it, or if you are a builder, architect, project manager, etc., that you are correctly advised by a lawyer, about this type of contracts taking a balanced view of the potential risks, advantages, etc. before signing.
If you have problems with the developer, or the builder, or with the project manager in a construction process, if you want to resolve or terminate a building contract, or you want to sign a contract and require professional advice, contact us and we will help you.
The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.
Carlos Baos (Lawyer)
White & Baos
Tel: +34 966 426 185
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