ST KITTS & NEVIS Law and Practice Contributed by: Dahlia Joseph Rowe and Daisy Joseph Andall, Joseph Rowe, Attorneys-at-Law
Warranties A warranty would be used in a construction con - tract to specify the course of action to be taken in the event that something goes wrong. Limitation Act Any construction contract is subject to the provi - sions of the Limitation Act, which outlines that a party has six years to sue for a breach of con - tract, or under a contract, which time can be extended when the breach is acknowledged or a promise is made to fulfil the terms of the con - tract. 7.4 Management of Schedule-Related Risk The parties to a construction project would typi - cally include a clause that facilitates the man - agement of schedule-related risks. The contract can outline that the developers compensate the owner if the project is not completed on sched - ule due to the fault of the persons working on the project. The contract can also set out what is considered as a reasonable delay in the schedule or what would happen if the delay in the sched - ule was due to any unforeseen circumstances. The specific terms would be based on the nego - tiations of the parties taking into consideration the nature of the project and issues related to the location of the project, amongst other things. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance An additional form of security common to con - struction projects is performance bonds. The owner or investor of a construction project would generally require the general contractor to get the other contractors or project manag - ers to sign performance bonds so that they do not lose the value of the work in the event of an unforeseen circumstance that would adversely
affect the project, such as the insolvency of the party before the completion of the project. 7.6 Liens or Encumbrances in the Event of Non-payment A lien or encumbrance is generally seen in unit price contracts. Those contracts generally stipu - late that the developer is paid after or in advance of the construction of a unit. If the payment is not forthcoming, the developer can cease working on the next unit or phase until the contracted payment is made. It is possible for an owner, in an effort to prevent delays in the project, to include a term in the contract that the developer continues working, subject to the payment of interest as a penalty for non-payment. 7.7 Requirements Before Use or Inhabitation There is no set requirement imposed by the law before a development project can be inhabited or used for its intended purpose. It is only subject to approvals and conditions when permission for the development is being sought. Contracts may require the contractor to issue a certificate of occupancy before the project can be inhabited for insurance or other purposes. Value added tax is payable on the sale of goods and services. Therefore, VAT is not paid on the sale or purchase of real estate. However, if the attorney-at-law conducting the transaction is registered for VAT, VAT would be payable on his or her legal fees. 8.2 Mitigation of Tax Liability In order to mitigate the tax liability on acquisi - tions of large real estate portfolios, the Stamps 8. Tax 8.1 VAT and Sales Tax
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