HUNGARY Law and Practice Contributed by: Attila Ungár and Júlia Várkonyi, Lakatos, Köves & Partners
dispute the request within the statutory deadline, the landlord’s payment request becomes enforceable (if the tenant disputes the payment request, the process may be continued before the civil court). It is also an option to enforce claims by initiating a liquidation pro - ceeding against the tenant, but this is not a standard route, as it requires effort from the landlord and the settlement of claims is not ensured. 7. Construction 7.1 Common Structures Used to Price Construction Projects Construction contracts typically set out a fixed con - tract price for the scope of work covered (ie, the con - tract price is determined before the fulfilment of the work). Unit/itemised prices are also commonly used, which means that the contractor is paid based on the effective fulfilment (ie, the contract price is determined following the fulfilment of the work). 7.2 Assigning Responsibility for the Design and Construction of a Project If a separate architectural services firm is involved, such firm (designer) will usually be responsible for obtaining the building permit, while the general con - tractor is responsible for the construction and obtain - ing the occupancy permit. Engineering, procurement and construction (EPC) agreements under which the contractor is responsible for both design and construction are also widespread. In the case of EPC agreements, the contractors under - take higher responsibility for budget, milestones/com - pletion deadlines and quality/remedying defects. Engineering, procurement and construction manage - ment (EPCM) agreements are also common, whereby the project manager is responsible for the co-ordina - tion of the entire construction project (often including the design), although the main responsibilities remain with the construction contractor or other (sub)con - tractors. 7.3 Management of Construction Risk Limitation-of-liability clauses, contractual warranties, various forms of insurance, liquidated damages, and
parent company or bank guarantees covering perfor - mance and maintenance periods are commonly used to manage construction risks. In addition to any con - tractual warranties/guarantees, statutory minimum warranty/guarantee periods apply to different types of built-in materials/superstructures. 7.4 Management of Schedule-Related Risk The tools most used to manage schedule-related risk are: • delay penalties (or liquidated damages); and • withholding certain amounts (from the contract price based on achieving project milestones by the deadline). The owner is usually also entitled to claim damages exceeding the amount of the penalty. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance Parent company guarantees and bank guarantees are commonly used to guarantee contractors’ perfor - mance. It is also typical for the contractor to replace the withheld contract price with an equivalent amount of bank guarantee. A construction trustee regime is applicable above certain construction value thresholds, which aims to ensure due payment within all levels of the construc - tion chain (ie, the owner shall advance the contract price for the respective phases to the trustee, to be released upon certification of due performance). Another form of security can be a performance secu - rity, based on which a particular percentage (usually 5% or 10%) is withheld from the amount of every con - tractor’s invoice. Such amounts shall be released only if certain requirements are fulfilled by the contractor (eg, the issuance of all required permits). 7.6 Liens or Encumbrances in the Event of Non-Payment Contractors have a statutory lien up to the amount of the outstanding contract price and costs over the assets of the owner that are possessed by the con - tractor within the scope of the construction agree -
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