Does the law state what has to be achieved before 'completion' of the building works can be certified and, if so, can this be overridden by specific terms in the contract? Who would certify completion of building works carried out in accordance with a construction contract?
Completion of the building works is assessed and certified through a process known as handover of the works (recepção da obra), which may be requested by the contractor or at the owner’s initiative once the works are completed.
The handover is recorded in certificates of completion (autos de recepção) signed by both parties. First, there will be a provisional handover and once the warranty period against defects (that starts to run from the provisional handover date) has elapsed, a final handover takes place.
If relevant defects are detected, partial handover minutes are signed and the contractor is obliged to repair the defects within a short period of time, the length of which may vary depending on the extent of the defects.
Australian construction contracts commonly refer to completion of the works as ‘Practical Completion’ (in other words, substantial completion). By this point in time, the works must be complete ‘for all practical purposes’ so as to enable beneficial occupation; they may be practically complete even if there are latent defects, but a certificate should not be issued if there are any patent defects.
Practical or substantial completion is usually achieved to the satisfaction of a third party certifier such as the architect, superintendent or other employer’s agent who has the discretion to certify practical completion where minor items are incomplete.
Practical or substantial completion is often defined in detail in industry standard form building contracts such as the Australian Standards and state which requirements must first be satisfied before the works may be certified as practically complete.
Belgian law does not provide for what has to be achieved before completion of the building works can be certified. The delivery of the works will be the execution and delivery by the contractor of the contractually defined works. The contractor will meet his contractual delivery obligation by offering the executed works to the principal for certification. The acceptance by the principal is traditionally considered as an acknowledgement that the works have been completed satisfactorily.
Contracts, practice or the law provides for a mechanism known as double acceptance, which encapsulates the provisional acceptance and then final acceptance of the works by the principal. Here, the principal will usually discharge the contractor from all liabilities, except for the liabilities covered by the 10-year liability rule with respect to buildings and major works. This rule provides that after 10 years, architects and contractors are discharged from their responsibility regarding the major works they have executed or have controlled – they are therefore no longer susceptible to claims after a 10-year period.
'Completion' of the building as such is not defined by law. The law does not stipulate what has to be achieved before 'completion' of the building work can be certified; however, it is considered that the work is completed once a Use Permit is obtained from the local administrative authority. There is no official body which can certify that completion of building works has been achieved in accordance with the contract, other than the parties to the contract. Official administrative authorities provide a Use Permit which certifies that the general standards in construction have been complied with and that the building as such is safe to be used.
Most jurisdictions in Canada have a statutory concept called ‘substantial performance’ or ‘substantial completion’, which is achieved when the criteria prescribed by the legislation have been met. Typically, this means that the project is ready for occupancy and that a threshold for the amount of work remaining until total completion has been achieved. The substantial performance date will in turn also drive the deadline for preserving construction lien rights and the release of holdback funds.
Canadian construction contracts also often supplement these concepts, to the extent permitted by legislation.
Substantial completion is usually achieved to the satisfaction of a third party certifier such as the architect, superintendent or other employer’s agent who has the discretion to certify substantial completion where minor items are incomplete. Substantial completion should be left to the discretion of the third party certifier. Building contracts are often amended to state that certain requirements must first be satisfied before the works may be certified as substantially complete.
Completion of building works is achieved where a completion certificate is issued. The completion certificate is signed and stamped by each of the contractors involved in the building works and by each of the inspecting government authorities.
Although the completion of works is not defined by law, construction of a building is considered to be completed if the building is ready for use. In accordance with the Act on Construction (Official Gazette Nos. 153/13 and 20/17), a building may be used only upon the issue of a Usage Permit, which is issued by the competent zoning and construction authority upon the performance of a technical inspection.
A completed structure, or a part of a structure, which is capable of separate occupation or use may be put to use subject to notice being given to the building authority or a final inspection approval (this depends on the type of construction). A developer must ensure that, before the structure is brought into use, all tests and measurements prescribed by special regulations (relating to mechanical and electrical issues) have been satisfactorily carried out.
The building authority assesses whether the building has been constructed in accordance with all issued documents and permissions and whether it complies with all statutory requirements. The building authority also ascertains that the completed structure or its use will not endanger public health and safety, the health and safety of wildlife or the environment.
Where notice is to be given (smaller projects), the building authority prohibits occupation and use of the structure if it ascertains, at a final inspection, that the requirements of health and safety and environmental regulations mentioned above have not been satisfied, or that the general requirements of construction regulations have not been met.
A structure with characteristics that cannot be altered by future users (for example hospitals, schools, residential blocks of flats, commercial buildings) may be occupied and used only once the final inspection approval has been issued. The developer will apply to the relevant building authority for this approval. At the final inspection the building authority will, in particular, check whether the structure has been constructed in accordance with all the requirements mentioned above. However, the building authority does not check whether all the conditions of the contract have been met; the authority focuses only on the basic standards required by the regulations.
There are two different aspects to the completion of works: one is the administrative perspective and the other is the contractual context. From the building authority’s perspective, the work is finished when it meets the standards set by the relevant regulations whilst, from the contractual point of view, the work is finished when all the contractual terms and conditions are fulfilled.
At the request of the developer, the building authority may issue a time-limited permit for the use of a structure prior to completion, so long as this has no material impact on the usability of the structure and does not endanger health and safety or pose an environmental risk.
According to Danish construction law the works are completed when they comply with the contract and are ready for all practical purposes, such as occupation.
Where the works do not comply with the contract, a distinction between significant and insignificant faults and defects must be made. In the case of insignificant faults and defects the works may be considered to be 'completed', despite the non-compliance with the contract. In the case of significant faults and defects, the building works cannot be considered to have been 'completed' and therefore cannot be certified. Certification is effected by the parties.
Under Danish contract law there is a principle of freedom to enter into a contract, so the parties are free to agree on the criteria the works must fulfil to be considered 'completed'.
Before moving into the building, it is necessary to obtain an occupation permit from the municipality, which is not granted until the building works are practically completed.
A building is deemed to be completed once the works and associated essential equipment can be operated in compliance with the agreed use.
The parties are free to derogate from this provision and to provide for any other definition of completion, except for residential buildings subject to mandatory requirements.
The parties are free to agree on the mechanism and proceedings pursuant to which the completion of the building will be ascertained.
Contracts often provide that completion shall be as mutually agreed by the parties and that, should the parties fail to reach an agreement, an expert (either designated in the contract or to be appointed by the court) will decide whether the building is completed or not.
From a town planning perspective, the owner has the obligation to file a declaration of completion and compliance of the works. Upon receiving this declaration, the administrative authorities have from three to five months to verify if the works are compliant with the administrative authorisation obtained. Then, the owner can request a certificate of non-opposition to the compliance of the works.
Specific administrative authorisations may be necessary in order to be able to use/operate the building in some limited cases (eg high-rise buildings and premises to be open to the public).
The law does not specify when completion under a construction contract is achieved; this depends on the contractual agreement between the parties. The civil law term which indicates that building works are completed in accordance with the contractual agreement is 'acceptance'. Acceptance is a statement by the principal to the contractor that the contractor has substantially performed the work contracted for in compliance with the construction contract. A work shall also be considered as accepted if the contractor has set the principal a reasonable deadline for acceptance after completion of the work and the principal has not refused acceptance within this period, stating at least one defect (so called 'fictitious acceptance'). The principal must reserve the right to assert claims for damages at the time of the acceptance unless otherwise agreed in the construction contract.
Under the Contracting rules for the Construction Contract Procedures Part B (VOB/B) the principal is obliged to accept the work if after completion the contractor demands that it is accepted. The principal can deny acceptance where there are material defects until they are remedied.
The VOB/B provides for three types of acceptance:
In contrast to acceptance under civil law, public law provides that the completion of a building in accordance with the building permit must, in principle, be certified and submitted to the competent building authority by the principal or the construction manager (Bauleiter).
Hong Kong law does not explicitly state what has to be achieved before ‘completion’ of the building works can be certified, and this is a commercial term to be agreed between the parties.
Completion is usually described as practical completion or substantial completion and is reached when the architect/contract administrator issues a certificate to that effect. Practical completion means that the building should be ready for all practical purposes so that it can be used for the purposes intended by the parties immediately upon completion. That does not mean that there might not be defects or imperfections provided that those did not interfere with the beneficial occupation and use of premises for its intended purposes.
The building works are taken over by the employer when completion of the works has been reported by the contractor to the employer. In certain cases, a trial operation lasting for at least 30 days is also required. As part of the takeover procedure, the employer inspects the works and any deficiencies, defects and warranty claims are recorded. Minor defects not affecting ordinary use usually do not entitle the employer to reject taking over the works.
For the purpose of issuing the occupancy permit the representatives of the relevant authorities also conduct a site visit in order to determine whether the works have been carried out and completed in compliance with the applicable laws, regulations and the building permit and whether the works are suitable for the intended use and occupation.
The parties may also agree that the certification of completion is referred to a third-party certifier, such as an architect or engineer. This is also common in FIDIC (and FIDIC-based) construction contracts.
Standard forms of construction contract generally provide for single-stage completion at the end of the project. On larger projects using bespoke forms, sectional completions may be used.
Practical completion under the RIAI form of contract is where the architect certifies that the works are carried out to such a stage that they can be taken over by the employer and used for their intended purpose. Any defects are trivial in nature and would not interfere with use. Defects are generally remedied within a period of six months of practical completion. At practical completion, the architect will issue a practical completion certificate in a standard industry format.
The IEI form of contract provides for a certificate of completion to be executed by the employer's engineer where the works are substantially completed and have passed any final tests.
Each form of contract provides for a completion certification process, and periods after completion within which minor defects are remedied.
The Building Control (Amendment) Regulations 2014 (the “2014 Regulations”) now require that a Certificate of Compliance on Completion (the “Certificate”) to be sent to the building control authority and included on the statutory register before works or a building to which the 2014 Regulations apply can be opened, occupied or used. The Certificate must be signed by the builder and "Assigned Certifier" and must be accompanied by plans and documentation showing how the completed building complies with the requirements of the Building Control Regulations and the inspection plan implemented by the Assigned Certifier.
Upon receipt of the Certificate the building control authority will record the date of receipt of the Certificate and will determine within 21 days whether or not it is valid. If the building authority validates the Certificate it will, within 21 days of receipt, enter the particulars on the public register and notify the person who submitted the Certificate. The Certificate must be submitted, validated and placed on the public register before a building may be used and occupied.
According to the usual market practice, the contractual parties usually define, in the relevant contract, the concept of 'completion' on the basis of their respective interests. Such definition is normally inserted in the contracts since the applicable laws do not provide for a definition of completion of the building works. The certification of completion is normally carried out by the consultants appointed by the contractual parties, who will check the compliance of the works with the relevant project and technical specifications. Moreover, the construction contracts may provide that in case of differences between the parties' consultants an independent expert will be appointed, either by the parties or by an independent body, in order to proceed with the assessment of the completion of the building works with respect to the agreed projects and specifications.
Yes. The BSA requires owners to submit an application for completion inspection of the completed works to a designated inspection agency that will certify that the completed building and its premises abide by the relevant building regulations. These regulations cannot be overridden by agreement between the parties.
The Dutch Civil Code provides no criteria for completion. Pursuant to Dutch case law, the work has to be suitable for the envisaged use. That means that, in general, inferior defects or omissions are no reason for withholding consent with completion.
Construction works are generally deemed to be completed in accordance with a completion procedure agreed on in advance. The terms of such procedures depend on the conditions which apply to the construction contract. Often, a preliminary inspection of the works is carried out, followed shortly afterwards by the actual delivery. The delivery is effected in the presence of the parties to the contract, who will note which details must be rectified. The client will be assisted by his construction manager.
The parties are at liberty to agree in their contract what events will amount to the completion of the construction works. However, this is generally implied to mean that the development is completed and fit for the intended purpose.
Upon completion of the construction works, the contractor will give notice that the works are complete and upon inspections carried out by the employer’s architect and satisfaction that the works are complete, a Certificate of Practical Completion is issued by the architect or engineer to the contractor certifying that the works are complete.
Under the relevant state’s Physical and Urban Planning law, there is a requirement that mandates the Contractor to obtain a stage certificate of satisfactory execution upon completion of each stage of construction. In addition to this, there is a requirement for the issuance of a Certification of Completion and Fitness for Habitation by the appropriate agency of the Government certifying the completion of the building works. The law empowers the Building Control department to issue a Certificate of Completion and Fitness for Habitation for all building developments and this is a legal requirement that cannot be waived by the parties under their contract.
When the work is completed, a certificate of completion must be issued by the building authorities before the development or building can be used. If the building authorities consider that the development has been carried out in accordance with the building permit and the general requirements of planning and building legislation, a certificate of completion will be issued confirming this.
If the building authorities consider that there are relatively minor faults or defects with the development, the authorities can issue a temporary permit of use. The temporary permit means that the development can be used but on condition that the faults are corrected within a set period of time.
A building which is subject to a building permit, may be put to use after having notified the competent authority of the completion of the construction unless the said authority has raised, by a decision, objections within 14 days from the date of service of the notice. Further decisions will be required in certain circumstances under the Schedule to Building Law or the buildings are to be used prior to completion of the works.
The employer is obliged on completion of the construction works to notify a number of authorities including stating its intention to use the building. The notice must have attached to it a number of documents including a statement of compliance with the building design and any conditions specified in the building permit authorizing construction. The authorities can raise issues with the building by reference to the building plans.
The construction must be performed in accordance with the construction permit and, as between the parties, the terms of their construction contract. However, that said, the terms and conditions of the construction permit may not be overridden by the construction contract. For licensing/ planning purposes (eg the building must have a usage permit), completion of the works is certified by the relevant public authority with jurisdiction over the construction.
As far as pre-completion obligations are concerned, it is common for the employer to have the right to audit the construction works (either directly or through a third party) and, upon handover, to subject its acceptance to the removal of any construction defects. For contractual purposes, completion of the works is certified by both parties, directly or indirectly.
Under Romanian Construction Law no. 50/1991 and the national rules concerning the handover of construction works and associated installations, all the construction works which have been authorized by a building permit, are to be completed in accordance with the building permit by the time the handover minutes are signed. By this point, all necessary works for normal occupancy should have been completed.
The handover of the works is effected by a handover commission named by the client/employer and composed of representatives of the client/employer, of the local authorities and of experts. The structure of the reception commission has been extended, by including the following additional members:
In any event, the designer of the project must present its opinion on the construction works to the commission.
The reception commission examines the following:
In addition, a copy of the energy performance certificate for the building obtained by the client/employer must be attached to the documentation filed in respect of the handover. As of 19 July 2013, all handover minutes for works issued without a copy of the energy performance certificate attached are invalid.
The handover commission may request expert reports, other documents, samples and other tests.
On completion of the handover inspection, the reception commission will present to the client/employer the handover protocol with its observations and recommendations. If the client/employer consents to a handover subject to minor items still requiring to be completed, the contractor must remedy the defects within a period of time agreed with the client/employer. However the handover will not occur if there are minor works outstanding and the client/employer does not consent to the handover.
The handover procedure is compulsory for all authorized building works and non-compliance with this obligation means the works will not be treated as completed. As a sanction, the development will not be registered with the Cadastre and Real Estate Publicity Office. The failure to perform the reception upon the completion of the construction works in accordance with the applicable regulations is deemed an administrative offense and is sanctioned with a fine of RON 2,000 (approx. EUR 414).
Russian law does not specify what must be achieved before 'completion' of the building works under the construction contract. It is a general rule that all the works envisaged under the construction contract should be completed, and that the building must be fit for purpose. When transferring works from contractor to employer mandatory procedures apply. These mandatory procedures are stipulated by the competent federal authorities. The completion of the works carried out in accordance with the construction contract is certified by the client.
Completion of the building in accordance with the construction permit, the project documentation and applicable zoning/planning regulations is certified by a permit to operate the building issued by the relevant state or local authorities. It is not permitted to operate the building before this permit has been received. It may be an obligation of the contractor under the construction contract to ensure the permit to operate the building is obtained.
During the course of the construction, a construction manager (employed by the contractor) shall check that the construction is carried out in line with the project documentation or any other technical requirements.
After the construction has been completed, the compliance of the building with the documentation referred to in the related zoning permit and the building permit is scrutinised and inspected by the building office in the part of the process known as the occupancy proceedings. Provided that the building is in line with the requirements of the Building Act, the building office will then issue an occupancy certificate which will allow the developer (being the end user) to occupy the building in accordance with its purpose. This procedure cannot be overridden or excluded by any contract.
In terms of the liability for defects the verification by the client is important. The compliance of the works or the building with the contract for work will generally be verified by the client himself, as he is bound to inspect the work (object) or to arrange for its inspection as soon as possible after it has been handed over to him.
The Spanish Building Act provides for a process known as handover of the works, which must happen within 30 days of the issue by the works manager of a certificate of completion (certificado de final de obra). Handover of the works transfers the risk of damage to the works to the developer.
Normally there will be a provisional handover, even if there are some minor defects still outstanding (a punch list) that the contractor undertakes to make good within the guarantee period normally lasting for one year. Once the guarantee period has elapsed, a final handover takes place.
For legal purposes, the initial handover is recorded in 'handover minutes' (acta de recepción) to be signed by both the developer and the contractor. The legal periods of guarantee start to run from the date of these minutes.
If relevant defects are detected, partial handover minutes (acta de recepción parcial) are signed. In these partial handover minutes, the developer accepts the building, but points out the defects detected, and the contractor is obliged to repair them within a short period of time the length of which may vary depending on the extent of the defects. Once the period for repairing the defects has elapsed a new inspection takes place in order to make sure that the defects have been properly made good, and the handover minutes are then signed.
The construction contract will normally include the conditions precedent which must be fulfilled before the handover can take place.
The municipality must approve the building works in a final report (Slutbesked). It is also often stated in the contract that since the employer is required to demonstrate compliance with certain checking processes according to a predefined scheme before the building works can be approved in a final inspection, the contractor must check his own work in relation to certain criteria decided on at a meeting before starting the building process. On every building site there must be a quality ap-praiser who sets out the criteria as required by the municipality's building committee. The protocols from these processes must be given to the inspector at the final inspection for the works to be approved.
In Thailand, the law does not stipulate what has to be achieved before 'completion' of the construction works; this depends on the terms and conditions under the construction contract mutually agreed upon by the parties. In practice, the acceptance by the employer will be an official indication of completion of the construction works pursuant to the construction contract. In this regard, the employer must exercise caution on the acceptance of the delivery of the work because the contractor is not liable for any defect after acceptance by the employer, whether expressly or implied, unless the defect could not have been discovered before acceptance or the defect was concealed by the contractor pursuant to Section 598 of the Civil and Commercial Code.
In addition, unless otherwise provided in the contract, the contractor is liable for any defect which appears within five years from the date of delivery if the work is for the construction of a building pursuant to Section 600 of the Civil and Commercial Code.
Abu Dhabi construction contracts generally follow the principles of UK standard construction contracts pursuant to which ‘completion’ involves the works being complete 'for all practical purposes' so as to enable beneficial occupation, except for a few minor items; the works may be practically complete even if there are latent defects, but a certificate should not be issued if there are any patent defects. In addition, it is usually a contractual requirement for the contractor to have procured a Municipal Completion Certificate from the authorities and/or a building completion certificate from the General Directorate of Civil Defense in order to achieve completion. The Municipal Completion Certificate or building completion certificate generally allows the works to be used and occupied.
Completion is usually achieved to the satisfaction of a third-party certifier such as the architect or engineer who has the discretion to certify completion where minor items are incomplete.
Dubai construction contracts follow the references in UK standard construction contracts and commonly refer to completion of the works as Practical Completion. By this point in time, the works must be complete 'for all practical purposes' so as to enable beneficial occupation, except for a few minor items; the works may be practically complete even if there are latent defects, but a certificate should not be issued if there are any patent defects.
Practical Completion is usually achieved to the satisfaction of a third-party certifier such as the architect or employer's agent (in design and build procurement) who has the discretion to certify Practical Completion where minor items are incomplete.
One this has been achieved the relevant authority (Dubai Municipality, JAFZA or TECOM) come and inspect the site and review the As-Built drawings to confirm that the building is completed in line with the design as approved previously. The building cannot be occupied until the final certificate from the relevant authority has been obtained.
UK construction contracts commonly refer to completion of the works as ‘Practical Completion’. By this point in time, the works must be complete ‘for all practical purposes’ so as to enable beneficial occupation; they may be practically complete even if there are latent defects, but a certificate should not be issued if there are any patent defects.
Practical Completion is usually achieved to the satisfaction of a third party certifier such as the architect or employer’s agent (in design and build procurement) who has the discretion to certify Practical Completion where minor non-material items are incomplete.
Practical Completion is not defined in JCT construction contracts and should be left to the discretion of the third party certifier but industry standard form building contracts are often amended to state that certain requirements must first be satisfied before the works may be certified as practically complete.
UK construction contracts commonly refer to completion of the works as 'Practical Completion'. By this point in time, the works must be complete 'for all practical purposes' so as to enable beneficial occupation; they may be practically complete even if there are latent defects, but a certificate should not be issued if there are any patent defects.
Practical Completion is usually achieved to the satisfaction of a third party certifier such as the architect or employer's agent (in design and build procurement) who has the discretion to certify Practical Completion where minor non‑material items are incomplete.
Practical Completion is not defined in JCT/SBCC construction contracts and should be left to the discretion of the third party certifier but industry standard form building contracts are often amended to state that certain requirements must first be satisfied before the works may be certified as practically complete.
In Ukraine, completion of building works is defined by the construction contract and design documentation which also defines what has to be achieved before 'completion' of those works. Notwithstanding this principle, the law and construction regulations require that the building may be commissioned on completion of all works envisaged by the relevant design documentation (although façade and site landscaping works may be completed after the commissioning if that occurs during the winter). In the construction contract and design documentation the parties usually agree on a wider scope of works to be completed before the new construction is handed over to the customer.
The commissioning of the building/other facility is certified by the local Inspectorate of Construction and Architecture Control (the state authority with responsibility for construction issues) or the architectural department of the municipality (for the area in which the relevant building/other facility is located) by means of the issuance of a Certificate of Compliance (for technically complex projects) or registration of a Declaration of the Readiness for Use of a Completed Construction Project (for technically simple projects). The completion of construction works envisaged in the construction contract is usually certified by execution of the act of acceptance of the completed works/facility between the client for the works, the general contractor and other contractors.
The common law ‘doctrine of substantial completion’ provides that the project is substantially complete, if it is ‘nearly equivalent’ to what was bargained for. Ocean Ridge Develop. Corp. vs. Quality Plastering, 247 So.2d 72, 75 (Fla. 4th DCA 1971). Courts and the construction industry in the US generally interpret this to mean that the owner can use the building for the purpose intended. One of the significant indicators that a building can be used for the purpose intended is the issuance of a certificate of occupancy by the relevant authority stating that the building is ready to be occupied, with all mechanical, electrical, ventilation, elevator, safety and other systems and features in place and operational.
The foregoing aside, the parties to a contract typically define the term ‘substantial completion’ in the contract with greater specificity and include conditions that the contractor must meet in order to achieve substantial completion. For example, the parties might provide that substantial completion only can occur where the remaining work is comprised of minor punch list items and require that the architect must certify that substantial completion has been achieved.
The contract also should set forth the procedure for certifying that the project is substantially complete. If an architect performs construction administration for the project, the architect likely will certify substantial completion. However, the contract also might provide for input from the owner, such as requiring that the owner be satisfied with the work or requiring that defective work be corrected prior to issuance of the certificate of substantial completion.
If the owner does not engage an architect during the construction phase of the project, then the contract might provide that the word ‘architect’ refers to the owner’s representative.
The parties are free to negotiate many of these provisions privately. However, a certificate of occupancy generally, if not always, must be obtained from the relevant governmental authority after construction but before a building can be occupied and used. The requirements for such certificate of occupancy are determined by the issuing governmental authority, and the parties to the contract cannot vary or change those requirements.
A local authority would give final approval and a certificate of occupation in respect of residential, commercial and industrial zones, based on a structural certificate, given by the construction engineer, that signals that the building is complete and suitable for use. In addition to this, the parties would ordinarily agree to appoint a person to certify the successful completion of the project before the contract is even signed.