BELGIUM Law and Practice Contributed by: Pieter Puelinckx, Yves Moreau, Melissa Verplancke and Gauthier Callens, Linklaters
7.5 Additional Forms of Security to Guarantee a Contractor’s Performance Construction agreements often stipulate that contractors must provide a bank-guaranteed performance bond to ensure work comple - tion. The conditions for releasing or reducing the bond are negotiable, but typically involve reaching milestones (eg, a half release at provi - sional acceptance, and the rest at final accept - ance). Alternative guarantees like parent com - pany guarantees, letters of credit, performance guarantees, and insurance policies may also be negotiated. In cases where the Breyne Act apply (for residential properties), securities must be provided by contractor, the scope of which varying between accredited or non-accredited contractors. 7.6 Liens or Encumbrances in the Event of Non-payment Construction and architect agreements usu - ally include a default interest clause for late payments. Architects and contractors can also withhold performance their services in case of default of payment. They have also privileged creditor status on the increase in value of the employer’s property resulting from their services. Furthermore, contractors may also retain owner - ship of certain installations or materials, despite incorporation into the works, through retention of title registered in the national pledge register. 7.7 Requirements Before Use or Inhabitation Depending on the specific use of the real estate asset and the region in which the real estate asset is located, several authorisations or certifi - cates might be required, including with respect to the operation of certain classified activities or installations (eg, operation of parking, heat - ing and cooling installations), the operation of
acceptance, but agreements often stipulate that it will start from provisional acceptance. This safeguard also applies to future owners since the ten-year liability is linked to the prop - erty itself, rather than to the individual buyer or employer. The aforementioned division between provi - sional and final acceptance is mandatory if the Breyne Act applies, ie, for agreements concern - ing residential buildings to be built or under construction. In that case, the warranty period should entail at least one year. Constructions involving technical installations, such as solar panels or a cogeneration installa - tion, will usually also benefit from contractually stipulated performance guarantees ensuring, for example, a minimum output or functionality dur - ing an agreed period of time. 7.4 Management of Schedule-Related Risk Contractual agreements generally address the consequences of delays attributable to the architect/contractor, including late delivery pen - alties, time extensions, contractor/architect sub - stitution or termination. Contracts often exempt the architect/contractor from liability for third- party caused delays and address force majeure events by excluding or granting employer indem - nification only if the delay extends past a certain timeframe. For residential properties, the Breyne Act pro - vides that the compensation must be at least equivalent with the property’s standard rental value upon completion.
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