Parliament extends deadline for reporting construction defects
Home buyers and builders should have more time to report construction defects in future. Parliament has agreed on a revision of the law on sales and contracts for work and labour, which in particular extends the deadlines for reporting defects and improves the protection of building owners.
The amendment to the law on sales and contracts for work and labour aims to strengthen the legal position of house buyers and builders. The previous practice of reporting construction defects as soon as they were discovered often led to uncertainty and legal disputes. The Federal Council therefore put forward a compromise proposal, which was supported by both chambers, for a sixty-day period for notifying defects in contracts for work and property purchase contracts.
Debate on notice periods and limitation periods
The National Council had originally proposed dispensing with the notice periods altogether and instead introducing an extended limitation period of ten years. However, this solution was not accepted by the Council of States. The concern was that a complete abolition of the time limits for lodging complaints would lead to considerable legal uncertainty and practical problems in providing evidence.
In the end, Parliament agreed to leave the period for lodging complaints at sixty days and not to extend the limitation period of five years. A balanced model that guarantees both legal certainty and protection for building owners.
Better protection for buyers and builders
Another key point of the reform is the protection of property buyers and builders from liability clauses that have often been interpreted to their disadvantage in the past. In many contracts, liability for construction defects was passed on to subcontractors, which put private developers in the difficult position of having to enforce their claims directly against the subcontractors. With the new regulation, the right to rectify defects may no longer be contractually excluded in future, which represents a considerable advantage for private construction projects.
Increased protection in the event of unpaid invoices
The issue of double payment obligations for building owners is also particularly controversial. If general contractors do not pass on payments to their subcontractors, building owners run the risk of them asserting their builder’s lien. Parliament decided that building owners can now avert the lien by means of a bank guarantee. However, the default interest only has to be covered for a period of ten years – a considerable relief for construction projects.
The reform of sales and work contract law represents an important step towards greater legal certainty and protection in the construction industry. The extension of the time limits for notifying defects and the strengthening of the position of builders and buyers strike a balance between the interests of the construction industry and the needs of private builders. The bill will now return to the Council of States for final finalisation.