AUSTRIA Law and Practice Contributed by: Christoph Urbanek, Irena Gogl-Hassanin and Mario Schiavon, Urbanek Law
7.6 Liens or Encumbrances in the Event of Non-Payment In Austria, contractors and designers have the right to establish a construction lien on the prop - erty in the event of delayed payment. This lien serves as security for unpaid services and is recorded in the land registry. To remove the lien, the owner must settle the outstanding claim or obtain a release of lien from the creditor. If the payment is not made, the creditor can enforce the lien, which in the worst case can lead to a foreclosure sale of the property. 7.7 Requirements Before Use or Inhabitation Austrian law requires that certain requirements be met before a project can be used or occu - pied. One of the most important of these is the building permit, which must be granted before construction begins and ensures that the pro - ject meets the applicable building regulations and standards. Once construction is complete, a final inspection is usually carried out to ensure that the building corresponds to the approved plans and that the necessary safety and health standards have been met. If this is the case, an occupancy permit or usage approval is issued, which allows the owner to use the building for its intended purpose. Without this permit, the building cannot be used, even if it is already completed.
instruments are legally limited: disclaimers or limitations of liability for personal injury or inten - tionally inflicted harm are generally not allowed. 7.4 Management of Schedule-Related Risk Contractual provisions and detailed project plan - ning are typically used to manage the deadline risk on construction projects. The parties can contractually stipulate that the owner is entitled to monetary compensation if certain milestones or completion dates are not met. These provi - sions are often found in construction contracts or general contractor agreements, whereby a contractual penalty (also known as a delay pen - alty) is agreed to be paid if deadlines are not met. Exceptions for unforeseeable events such as force majeure can also be taken into account. The exact amount and conditions of such com - pensation are specified in the contract to mini - mise risk and provide clarity for all parties. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance It is common for owners to require additional col - lateral security to guarantee the performance of contractors in construction projects. The instru - ments commonly used include guarantees (eg, bank guarantees or performance bonds), which provide financial security in case the contrac - tor fails to meet its contractual obligations. Par - ent company guarantees, performance bonds and escrow accounts are also commonly used to minimise risk for the owner. Letters of credit may also be an option, particularly for interna - tional projects. These tools are used to ensure that work is carried out properly and that funds are available in the event of problems.
8. Tax 8.1 VAT and Sales Tax
When buying or selling corporate real estate (eg commercially used properties) in Austria, the transaction is generally subject to value added tax (VAT). The standard tax rate is 20%, but it may be reduced to 10% or 0% under certain circumstances. In the case of the sale of real
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