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 |  Dr. Dieter Jasper, LL.M.

Compensation for damages in the event of construction defects

How do I proceed in case of construction defects?

The most frequent case will be when I, as the client, notice myself that there is a defect in my building. Defects can occur in any part of the work. As soon as I, as the client, notice a defect, I must of course comment on it. In this context, it is recommended that if I have engaged experts for me anyway, such as an architect or a private construction manager, I inform them about the obvious defect.

Another possibility is that the construction manager or architect appointed by me finds defects that I, as a layman, did not recognize at all. These construction defects would then have to be recorded immediately, if possible with the help of an expert, i.e. documented. This usually requires precise protocols, measurements, possibly also the immediate involvement of an expert and photo documentation. At the same time, I ask my expert (or I do it myself) to report the construction defect to my contractual partner, i.e. the contractor, and to ask him to remedy it within a reasonable period of time. If I am unsure here, it is advisable to consult a specialised lawyer who will ensure that both the notifications are correct and the deadline is set appropriately in accordance with case law.

Who pays in the event of construction defects?

In general, the building contractor is obliged to construct the building in accordance with the contract until acceptance. Until then, the client has a claim to performance. He can therefore invoke the fact that the contractually agreed work has not yet been performed by the building contractor.

If an acceptance has taken place and the defect is discovered after this acceptance, the client can assert warranty claims. To do so, he must first request the building contractor to remedy the construction defect within a certain period of time. The client who keeps the work and has the defect remedied can claim the costs he has incurred for remedying the defect as damages according to § 634 no. 4, §§ 280, 281 BGB.

If the building contractor does not remedy the defects despite a set deadline, the orderer can claim damages from the building contractor. This is compensation in lieu of performance in the form of small damages pursuant to § 634 no. 4, §§ 280, 281 BGB. In addition, the client still has the right to demand advance payment according to § 634 no. 2, § 637 BGB if he wants to remedy the defect.

How long can one compain about construction defects?

If I am still before the acceptance as the client, I can complain that the building contractor has not yet completed his work. From a legal point of view, this is not a warranty claim, but a claim for completion (claim for performance). Theoretically, the building contractor must try to remedy this construction defect as often and as long as it takes to remedy the defect to the satisfaction of the client.

However, if the acceptance has already taken place and the client discovers a defect in a building, he must assert his warranty claim against the building contractor within a period of five years from the acceptance. In the case of insignificant work on a building, the period is only two years.

The client shall have the defect remedied.

The client decides to adhere to the work and not to remedy the defect.

The client shall have the defect remedied.

The client who keeps the work and has the defect remedied may claim compensation for the costs incurred by him for remedying the defect as damage pursuant to section 634 no. 4, sections 280, 281 BGB. Prior to payment of the costs, the client may demand release from the obligations entered into to remedy the defect. In addition, the client who has demanded compensation instead of performance in the form of minor damages pursuant to § 634 no. 4, §§ 280, 281 BGB, is still entitled to demand advance payment pursuant to § 634 no. 2, § 637 BGB if he wishes to remedy the defect. The invoice submitted by the new work contractor should reflect this damage very well.

The client decides to adhere to the work and not to remedy the defect.

The client who adheres to the work and does not have the defect remedied may assess the damage in such a way that he determines the difference between the hypothetical value of the object created or processed by the work and owned by the client without defect and the actual value of the object with defect by way of a balance of assets. If the client has sold the object created or processed by the work without the defects having been remedied, he may assess the damage according to the concrete reduced proceeds due to the defect of the object.

The damage can also be assessed in accordance with § 634 no. 3, § 638 BGB (German Civil Code) by estimating the reduced value of the work due to the (unrepaired) defect on the basis of the remuneration agreed for the work. The yardstick is the disruption of the equivalence relationship caused by the defect in the work.

In this case, the client cannot assess his damage according to the fictitious costs of remedying the defect within the scope of compensation for damages instead of performance (§§ 634 no. 4, § 280, 281 BGB).

Concerning this matter, refer to the authoritative decision of the Federal Court of Justice (BGH of 22 February 2018, ref. no. VII ZR 46/2017).

Düsseldorf, the 25th of March 2022

Author: Lawyer Dr. Dieter Jasper

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