PUERTO RICO Law and Practice Contributed by: Antonio Santos, Donald Hull and Paola Canino, Pietrantoni Mendez & Alvarez LLC
with regard to the eviction of residential tenants that are insolvent families, which requires giving notice of the judicial order to the Department of Family and can only occur after 20 days from the date of such notice. Furthermore, in such cases, a representative of the Department of Family must be brought as a necessary party to the eviction proceeding. 6.22 Termination by a Third Party A lease may be terminated by a governmental authority in Puerto Rico, using its powers of con - demnation and expropriation, as a result of the taking of the leased property for a public pur - pose. However, the government must always pay just compensation to the affected parties, which is often the subject of litigation, making the length of the entire process uncertain and unpredictable. 6.23 Remedies/Damages for Breach There are no statutory limitations on damages in the event of a tenant’s breach and termination of a lease. The most common type of security offered by tenants under commercial leases in Puerto Rico is a security deposit. If the tenant fails to perform a monetary obligation, the land - lord may use the deposit to satisfy the tenant’s unpaid obligation in accordance with the terms of the lease agreement. 7. Construction 7.1 Common Structures Used to Price Construction Projects The most common types of contractual arrange - ments in Puerto Rico between the owner of a construction project and the contractor are: • “stipulated sum” , in which the basis of pay - ment is a fixed price; and “cost plus” , in which
the basis of payment is the cost of the work plus a fee for the contractor. Under the “cost plus” arrangement, the contrac - tor’s fee can be a fixed amount or alternatively a percentage of the cost of the project. “Cost plus” contracts sometimes provide for a guaran - teed maximum price, such that the amount to be paid by the owner of the project to the contractor never exceeds a predetermined amount. 7.2 Assigning Responsibility for the Design and Construction of a Project A variety of methods are commonly used in Puerto Rico for assigning responsibility for the design, construction and administration of a project. Design, which is the initial step, must always be undertaken by one or more architects who are licensed in Puerto Rico. The construc - tion of the project itself may be arranged under a single contract with a licensed general contrac - tor or under a number of separate contracts with specialised contractors whose work is co-ordi - nated by the project architect or a construction manager. Finally, the design and construction functions may also be combined under a single approach commonly known as “design-build” , where the owner of the project contracts with a single entity that provides design, construc - tion and contract administration services for the project. 7.3 Management of Construction Risk Construction risk in Puerto Rico is typically man - aged contractually in the project agreements by means of warranties, indemnification provisions and limitations of liability. Of course, the effec - tiveness of these devices is dependent on the solvency of the obligated parties. To the extent possible, when the solvency and experience of one of the parties is in question, the counterparty will seek to obtain guarantees from sureties or third-party guarantors. As a general rule, these
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