The Law Breyne

Part 6


FINANCIAL GUARANTEE

In order to guarantee his obligations, the contractor, seller or promoter must provide security to his co-contractor. The guarantee scheme differs depending on whether or not it concerns a recognized contractor:

• The recognized contractor3 is obliged to provide a guarantee of 5% of the price of the building and must, within thirty days of signing the agreement, submit proof of this, signed by the Deposit and Consignation Office.

“Price of the building” is understood to mean: the total price of the house or apartment, less any cost price of the building land (or the total price of the renovation or extension works), not including VAT. 11 This bail is provided in cash, in government funds, in the form of a joint bond or in the form of a global bail.

The surety bond set by the recognized contractor is released in halves: the first half at the provisional acceptance, the remaining part at the final acceptance. However, in the event of delays in performance or total or partial non-performance attributable to the seller or the contractor, the buyer or client may pre-deduct from the amount of the surety the sums due to him due to the loss suffered.

• The non-approved contractor is obliged to provide a completion guarantee, whereby a financial institution or an insurance company undertakes as a joint and several guarantee towards the buyer or client to pay the necessary sums for the completion of the house or building of which the apartment (in this case, the private parts of the apartment and the common parts of the building to the exclusion of the purely private parts of the other apartments). When selling an existing home accompanied by a building contract for the execution of renovation or extension works, the completion guarantee must cover the necessary sums for the completion of the planned works.

In case of sale, the notary must mention the surety agreement in the authentic deed and add a copy of this agreement to the deed of sale. In the case of a building contract, on the other hand, the contractor must submit proof of the deposit within thirty days of signing the contract.

If a completion guarantee has been provided, the guarantee's obligation ends upon provisional acceptance.

Sanction: The absence of the financial guarantee can lead to the nullity of the agreement. If the buyer or client wishes to invoke the nullity, he must do so before the execution of the authentic deed, or before the provisional acceptance in the case of a building contract.