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The Breyne Act: the implementing decrees
In order to become effective, laws must be transposed into (implementing) (royal) decrees and published in the Belgian Official Gazette. Here is the text of these decrees. They clarify and specify a number of articles of the Breyne Act. |
1/ Royal Decree of 21 October 1971, implementing Articles 7, 8 and 12 of the law of 9 July 1971, governing residential construction and the sale of housing that has yet to be built or is in the process of being built (Official Gazette 4.VI.1993).
Paragraph 1. The agreements referred to in Article 1 of the law of 9 July 1971 governing residential construction and the sale of housing that has yet to be built or is in the process of being built must mention, in addition to the total price, the part of that price which corresponds to the cost of the land.
For application of this decree, the price of the building is considered to be the total price less the cost of the land.
The price of the building is, up to a maximum of 80%, subject to revision in line with changes in wages and related social security contributions, and in line with changes in the cost of the materials or products used or implemented in the construction.
The above paragraph and the subsequent paragraphs attempt, in a very complicated way, to explain that the agreed price can be revised. However, the construction industry is actually indexed, reflecting increases in the price of materials and wages. Many construction companies will actually guarantee you a fixed price; ask for it to be stated in your contract.
Paragraph 2. Application of the revision referred to in this Article takes into account recent changes in wages, social security contributions and prices of materials and products, recorded before the start of the work for which part payment is being requested.
Paragraph 3. Revision on account of changes in wages and social security contributions may not exceed 50% of the price of the building.
Paragraph 4. For application of this Article, the following meanings will be used:
- Changes in wages and social security contributions are understood to mean changes in the average hourly wage based on the average of the wages of qualified skilled and unskilled labourers, set by the National Joint Committee of the Construction Industry for the category corresponding to the place in which the building site is located. Wages are increased by the overall percentage of social security contributions and insurance, as permitted by the Ministry of Public Works;
- Changes in the price of materials or products are understood to mean changes in the monthly index calculated based on annual consumption of the main materials used by the construction industry in the domestic market. This index is determined by the Official Building Materials Committee of the Ministry of Economic Affairs.
You will find the construction index in trade publications and on the Internet.
2/ Paragraph 1. Acceptance of work executed in accordance with an agreement referred to in Article 1 of the same law must fulfil the following minimum conditions.
Only a written document signed by both parties shall serve as proof of provisional or final acceptance of the work.
This is another very important clause. Prepare a detailed written report for both provisional and final acceptance, and have the reports signed by both the contractor and the architect.
Refusal of acceptance and the reasons therefor shall be notified by registered letter sent to the vendor or contractor.
Paragraph 2. However, unless evidence is provided to the contrary, any purchaser or client that occupies or uses the property is presumed to have tacitly given provisional acceptance.
This is a clause that some firms will try to exploit. If work drags on, you may be forced to move into your new home before provisional acceptance has been issued, unless you are able to stay with your family or in a hotel for a while. If you have no other choice but to occupy the property, draw up a schedule of condition with the architect and the contractor, clearly stating that the fact that you have been obliged to move into your home, for reasons not attributable to you, in no way implies acceptance of the work.
The purchaser or client is deemed to have approved the work, provisionally or finally, as the case may be, if he has not acted upon the written request of the vendor or contractor to verify acceptance by a given date and if, within two weeks of the vendor or contractor issuing formal notice in the form of a summons, the purchaser or client has failed to appear, on the date specified in the summons, for the purpose of performing the acceptance procedure. This provision does not apply to acceptance of the communal areas of an apartment building.
Paragraph 3. Any vendor or contactor that remains the owner of part of the building that is subject to an acceptance procedure shall not exercise any of the rights resulting from its status as co-owner during acceptance of communal areas of the property.
If provisional or final acceptance of communal areas requires the presence of one of the co-owners in order to be valid and the co-owner in question fails to appear within the reasonable timeframe set by the vendor or contractor in the corresponding summons, the court shall take the acceptance decision in place of the defaulting co-owner.
3/ The amount of the surety referred to in Article 12(1) of the same law is equal to 5% of the price of the building, rounded up to the nearest thousand francs, where necessary.
The surety shall be deposited with the Caisse des DŽp™ts et Consignations, either: in cash; in public funds; in the form of a joint surety pursuant to the Royal Decree of 11 March 1926, authorising contractors, public utilities and tenderers selected to carry out works of public utility to use, through the intermediary of duly authorised companies, a joint and several guarantee; in the form of a blanket guarantee, in accordance with the Ministerial Decree of 23 January 1937, relating to the blanket guarantee.
Within thirty days from the date of the agreement, the vendor or contractor shall prove to the purchaser or client that the said surety has been established, by producing the signed confirmation issued by the Caisse des DŽp™ts et Consignations.
You may be wondering what this Caisse des DŽp™ts et Consignations is. It is an arm (a separate government agency) of the Ministry of Finance, and is under the immediate authority of the Minister of Finance. The Caisse des DŽp™ts et Consignations has a branch in each district, where sureties can be deposited (for more information, visit the website http://treasury.fgov.be).
A tip: make sure you do ask for proof of the surety at the end of the period, as vendors or contractors sometimes overlook this.
In the event of delays in performance, or total or partial non-performance of the agreement, attributable to the vendor or contractor, the purchaser or client may deduct the amount owed for the loss suffered from the surety.
This surety shall be released in two halves: the first upon provisional acceptance and the second upon final acceptance, in accordance with the arrangements set out in the previous paragraph.
Within two weeks from the request of the vendor or contractor, and without prejudice to paragraph 4 of this Article, the purchaser or client shall authorise the Caisse des DŽp™ts et Consignations to release the first or second half of the surety, depending on the case. Upon expiry of this two-week deadline, by way of compensation payable by the purchaser or client, the vendor or contractor may charge interest at the legal rate, on any part of the surety that has not been released.
4/ The completion bond referred to in Article 12(2) of the same law shall take the form of an agreement in accordance with which a bank operating in Belgium, a public credit institution or an organisation subject to the supervision of mortgage lenders in conformity with Royal Decree No. 225 of 7 January 1936 regulating mortgages and organising the supervision of mortgage lenders, undertakes to pay, by way of a surety of the vendor or contractor to the purchaser or client, the amount required to complete the house or the building in which the apartment is located.
The solicitor shall mention the surety agreement in the deed of sale, enclosing a copy thereof.
Within thirty days of conclusion of the works contract, the contractor shall issue a surety certificate to the client.
Make sure you ask for proof of the surety.
The surety ceases to be valid upon provisional acceptance of the work.
5/ The Royal Decree of 1 July 1969, organising the protection of persons who acquire or build social housing or similar housing is hereby annulled.
6/ This Decree comes into force at the same time as the law of 9 July 1971, on 1 January 1972.
Conclusion
This law on the construction of housing was drafted in close cooperation with the building sector; otherwise, it may well have been stricter. Nonetheless, there are still companies that find ways of getting round this law.
Whatever the case, the Breyne Act constitutes your main protection when dealing with a building company. Therefore, it is very important for you to thoroughly read your contract and check that it fulfils all the legal requirements. If it does not, you should have it amended or demand additional guarantees. In black and white.
The revision formula explained
For those interested, here is a brief explanation of the revision formula that you will come across in many standard contracts.
p = P x ( (a x s ÷ S) + (b x i ÷ I) + c )
p represents the revised price, calculated as follows:
- P: the price as it appears in the contract
- small a: the average wage (this can only be revised up to a maximum of 50% of the total price; more often than not, this limit is 40%)
- small b: the average price of materials, calculated with the help of I and i (the construction index and the new construction index); this parameter is usually limited to 40% of the total price
- small c: parameter that determines that only 80% of the total price can be revised (in our example opposite)
Parameters a, b and c must be specified in your contract (provided this revision clause is applicable)
- small s: average wage on the project start date
- capital S: average wage on the contract signing date
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Example:
Suppose a company applies this revision formula with the following parameters: a = 0.25, b = 0.55, c = 0.20
The figures used in this example are those from June 2005 for S and I and from December 2005 for s and i.
p = 100.000€ x ( (0,25 x 26,226 ÷ 25,716) + (0,55 x 5251 ÷ 4955) + 0,20 ) = 103.779€
Therefore, over six months, the cost of the building has increased by nearly 3.8%.
Source : Tu bâtis je rénove
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