Payments, on account payments and guarantee witholdings in the contracts with building or real estate development companies
Generally, the contract foresees the percentage of the total price that the purchaser (in France generally responsable for the project (mâitre d'oeuvre) should advance re on account payments, according to the progress of work.
If the contract so foresees, the "mâitre d'oeuvre" can hold back part of every payment as a guarantee equal to a maximum of 5% of the on account payments.
The guarantee witholding is designed to ensure that the builder executes work or repairs work not in conformity with the contract.
It is generally held by a third party accepted by the mâitre d'oeuvre and the builder, or if not, by a nominee made by the president of the county court or the court of trade.
The guarantee witholding can be replaced by a bank guarantee, a specialized financial establishment's or a mutual guarantee company's guarantees.
It is granted to the builder for an amount equivalent to the guarantee witholding.
The balance is payable on receipt of the completed work.
However the mâitre d'oeuvre can decide not to free the amount held under the guarantee witholding, equal to maximum 5% of the total value of the cost.
The guarantee witholding can only be held for 1 year from the date of reception of the work, with or without reserve.
If the work is not remedied within one year, the mâitre d'oeuvre is entitled to block receipt of the guarantee witholding by the builder.
In this case, he must address his justified opposal by registered letter with acknowledgment to the trustee or to the guaranteeing body before the expiration of the one year delay.
If the mâitre d'oeuvre doesn't notify his opposition in this delay, the guarantee witholding is automatically released to the builder or the guaranty is cancelled. |
