The Breyne Act explained
Here is the full text of the law governing residential construction, the so-called "Breyne Act" (named after the minister who filed it) and its implementing decrees.
1/ Law of 3 May 1993, so-called "Breyne Act", amending 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 19.VI.1993). This law applies to any agreement relating to the transfer of ownership of a house or apartment that has yet to be built or is in the process of being built, as well as any agreement establishing an undertaking to build, have built or obtain such real estate, when the house or apartment is intended for residential use or mixed professional and residential use, in accordance with which the purchaser or client must effect one or more payments prior to completion of the construction.
In order for the Breyne Act to be applicable, 3 conditions must be met:
- The building must be for residential use (a shop or even a second home does not fulfil this requirement).
- The contractor or property developer must build the property or arrange for the property to be built, or obtain the property on your behalf. This may appear self-evident, but this is a very important clause. Reading between the lines, what this section is saying is that a single contractor (real estate developer) must be responsible for everything. If you use a number of different contractors and therefore there are various contracts, the law is not applicable! Not even if you conclude a contract with a single contractor for all structural work.
If you do not yet have a plot on which to build, the Breyne Act applies to the combined sale of a plot of land and the future construction of a dwelling. If, on the other hand, you already have a plot on which to build, the Breyne Act applies to both an individual works contract (with your architect and a general contractor) and a turnkey contract (based on the plans of the developer).
- You must make one or more payments before the dwelling is completed. (Only some building firms anticipate this point by only requesting full payment upon completion of the work). If the building has yet to be built or is in the process of being build, you are protected if you are required to pay for your home before it has been completed.
This law also applies to any agreement relating to the transfer of ownership and establishing an undertaking to convert or extend a house or apartment for residential use or mixed professional and residential use, when the total price of the conversion of extension work is greater than the minimum amount, the calculation of which will be determined by the King and, by virtue of the agreement, the purchaser or client must effect one or more payments prior to completion of the work.
The Breyne Act may also apply (since its amendment in 1993) to conversions or extensions, but only in certain circumstances:
- The conversion must be recorded in the transfer of ownership agreement. Therefore, the law only applies if you buy an existing dwelling from a property developer and specify in the contract the work that must be carried out on the property.
- On the condition that the total cost of the work reaches the threshold set by the King. In the implementing decrees (see below), this amount was set at a minimum of 80% of the sale price of the dwelling, with a lower limit of Û18,600. If you buy a house for Û100,000, you must spend Û80,000 on the conversion or extension to be entitled to protection under the Breyne Act.
- The condition that at least one payment must be made prior to completion of the work applies here too.
2/ This law is not applicable to agreements concluded by:
- Regional land and housing associations and their authorised companies;
- Local authorities and associations of local authorities;
- A purchaser or client whose usual business consists of building houses or apartments or arranging for houses or apartments to be built, with a view to selling them; an agreement concluded by such a purchaser or client is deemed to be concluded within the framework of his usual business.
Nor does this law apply to agreements regarding a study of the types of work referred to in Article 1, on the condition that the agreement contains a description of the work to be addressed in the study, as well as a statement of the needs of the purchaser or client. The cost of such a study cannot be more than 2% of the planned cost of the construction and the purchaser or client must always have a cooling-off period of at least seven days before the agreement becomes final.
The Breyne Act is only not applicable if a study fulfils all the conditions set out in this clause. Be careful with study contracts or feasibility studies that are too vague or basic, and with undertakings to sell, coordination contracts, and other types of agreements. Some people or companies try and use them to get round the Breyne Act leaving you, the client, with your hands tied.
3/ The agreements referred to in Article 1 are governed by the provisions of the Civil Code concerning sale or works contract subject to quotations or contracts and the exemptions established by this law.
4/ Under the agreement, the rights of the vendor to the land and existing buildings, linked to the house or apartment to be built or in the process of being built, are immediately transferred to the purchaser.
5/ Ownership of constructions to be built is progressively transferred in step with implementation of the materials and their incorporation in the ground or into the building being constructed. In the case of either a sale or works contract, the risks referred to in Article 1788 and 1789 of the Civil Code cannot be transferred prior to provisional acceptance of the work or, in the case of an apartment, prior to provisional acceptance of the private areas of the building.
You become the owner of the building materials as soon as they are placed in the ground or incorporated into the building. Any other materials and equipment on the building site remain the property of the contractor (if the contractor were to go bankrupt, you might be able exercise a right of retention over them). Therefore, it is the contractor who is responsible in the event of theft or damage in the course of the work (this is good to know, as it is fairly common for things to go missing from building sites). It is only upon provisional acceptance that this risk is transferred to you. The surface area comprises anything that has been built, installed or planted on a plot of land.
6/ Articles 1792 and 2270 of the Civil Code are also applicable to the vendor. The guarantee that must be furnished by the vendor by virtue of the previous paragraph covers successive owners of the house or apartment. However, legal action may only be brought against the original vendor.
If, in an apartment building, one of the apartments has been sold before being completed, the responsibility of the vendor with regard to the communal areas of apartments sold after completion is also governed by this Article.
7/ This Article 7 must be transcribed IN FULL and VERBATIM in your contact.
The agreements referred to in Article 1 of this law and any promises to conclude similar agreements must:
- Mention the identity of the owner of the land and any existing buildings;
- Mention the date on which planning permission was issued and the conditions of that permission or the agreement establishing the condition precedent of obtaining planning permission; in the latter case, the planning permission applicant must undertake to deliver a certified copy of the said permission and the conditions thereof to the other contracting party within one month of receipt of the decision;
b bis. Mention whether or not the purchaser or client has concluded the agreement subject to the condition precedent of obtaining financing for a minimum amount calculated based on conditions to be specified; this condition precedent may not apply for more than three months from the date on which the agreement is concluded;
In the case of turnkey projects, planning permission will rarely have been obtained by the time the contract is signed. Therefore, the contract must stipulate that it will cease to be effective if planning permission is not granted for the plans submitted. It must also specify whether or not your obtaining a mortgage constitutes a condition for cancellation of the contract. The amount of the mortgage that you plan to take out and the repayment details must be specified. This clause is only valid for a period of three months, and you will need to arrange your mortgage within this period. You cannot use this clause to get out of your contractual obligations.
- Contain an accurate description of the private and communal areas covered by the agreement;
- Include, in an appendix, detailed plans and specifications for the work covered by the agreement. These documents explicitly specify methods and materials that will be employed to execute the work and, where applicable, the circumstances in which departures may be made from the plans and specifications. These plans and specifications must be signed by an architect authorised to practice architecture in Belgium and, in the case of an apartment, accompanied by a copy of the duly authenticated deed and co-ownership rules.
To substitute these appendices in the duly authenticated deed, a solicitor's declaration may be included with the deed, stating that the documents in question are in the possession of the parties;
A contract, with only a small standard plan and sketchy specifications, is clearly insufficient to be deemed valid; it makes no difference if an architect from the firm has signed them.
- Specify the total price of the house or apartment or, where applicable, the total price of the conversion or extension and the payment terms; state that the price may be revised. This price encompasses all the work required to make the dwelling fit for habitation;
e bis. Mention the existence of any regional public housing grants and enclose the corresponding terms and conditions in an appendix to the contract;
In the case of a new build, the total price must be stated separately from the price of the land (see below, in Article 1.1 of the implementing decrees). In the case of a purchase followed by conversion, the price of the building and the price of the conversion or extension must be stated separately.
The price of the conversion must include all work required to make the dwelling fit for habitation. Therefore, electrics, plumbing and heating must certainly be covered; decorating and furnishing is not necessarily included.
The terms and conditions for entitlement to building and renovation grants or other possible types of assistance change regularly. Check that the version you have is the very latest version.
- State the start date of the work, the completion or delivery deadline and details of compensation for late completion or delivery; this compensation must be equivalent to at least the normal rental for the completed property covered by the contract;
Very important. We also recommend that you stipulate when the planning permission application must be submitted to the local authority.
The amount of late completion/delivery compensation will depend on both the size of the house that you plan to build (or buy and convert) and current rental prices in the area.
- Specify the acceptance procedure;
This point is expanded upon in the implementing decrees, below.
- Contain the affirmation of the parties that they have been familiar with the figures and documents mentioned in this Article for two weeks.
Many clients sign the contract without ever having seen it before. Hold on! Take the mandatory two weeks to have a good think about it.
The King can determine the minimum conditions that must be fulfilled in relation to the provisions of this Article.
The agreement must mention, in bold in a separate paragraph and a different font, that the purchaser or client may declare the agreement or any clause that is contrary to the law null and void in the event of non-compliance with the provisions of Articles 7 and 12 or provisions adopted by virtue of those articles, the text of which must be transcribed in full in the contract.
8/ The price referred to in Article 7(e) is the price on the date on which the agreement is signed.
The King determines the price revision procedure.
This point is also clarified in the implementing decrees, below.
9/ Final acceptance of the work can only take place once one year has elapsed since provisional acceptance and provided that final acceptance has been issued for communal areas, including access routes, so as to ensure that the building is fit for habitation.
In some contracts, the period between provisional and final acceptance is reduced to 6 months. This is not legal.
10/ The vendor or contractor may demand or accept no payment, of any kind whatsoever, prior to conclusion of the agreement referred to in Article 1.
If, upon conclusion of the contract, a down payment or deposit is paid, the value thereof may not exceed 5% of the total price.
This clause could not be much clearer, yet there are still firms that ask for a down payment before the contract has been signed or 10% upon signing of the contract. Again, this is illegal.
When the deed of sale is signed, the developer or contractor may request payment of a sum that, taking into account the down payment or deposit already paid, is equal to the price of the land or the portion of the land being sold, plus the cost of the work carried out with the approval of an architect authorised to practice architecture in Belgium. A copy of this approval must be enclosed with the deed.
In the cases provided for in Article 1(2), the sum referred to in the above paragraph shall be equal to the sale price of the real estate for which ownership is to be transferred, plus the cost of the work carried out.
If you buy a plot of land (to build on) or a house (to convert), you only pay the price (less the amount of the down payment) once the deed has been executed by the solicitor. In the event of a sale with conversion, the contractor/developer may increase the sale price of the house by the cost of any work previously carried out. An architect must confirm that the amount charged is correct. However, as the architect may be working for the developer, this confirmation may not be particularly reliable.
The balance of the price of the work will only become payable, in instalments, from the date on which the deed is executed; the total instalments may not exceed the cost of the work executed.
When a promise of agreement is not followed by conclusion of that agreement, the contractual compensation payable by the purchaser or client may not exceed 5% of the total price; notwithstanding its one-off nature, the contractual compensation may be increased or decreased if its amount is found to be lower or higher than the loss actually incurred.
11/ The agreement must not contain a buyback clause.
In the case of a buyback clause, the vendor/contractor reserves the right to buy the property back under certain conditions. This could put pressure on the purchaser/client to sell. These days, such practices are no longer permitted.
12/ When, with regard to the nature and size of the works entrusted to it, the vendor or contractor fulfils the conditions of the law of 20 March 1991, organising the accreditation of contractors, it must provide a surety; the amount of this surety as well as the arrangements for depositing and releasing it are determined by the King.
The vendor, developer or contractor must be able to guarantee its obligations. Contractors that fulfil several conditions can become accredited. This allows them to be considered for certain government contracts. (As a private individual, you do not really need to worry about this approval; it is much more important to know whether the contractor is registered.) A (sufficiently) accredited contractor must deposit a surety of 5% of the total price of the project with the Caisse des DŽp™ts et Consignations (see below). Half of this surety is released upon provisional acceptance of the work and the rest upon final acceptance.
Therefore, the client retains 2.5% of the price as a guarantee that any work that has not been carried out or is of a poor quality at the time of provisional acceptance will be completed or improved (although if any major jobs remain to be carried out, you run the risk of the contractor disappearing).
When the vendor or contractor does not fulfil the conditions of the law of 20 March 1991, as specified in the previous paragraph, it must guarantee completion of the house or apartment or, where applicable, the conversion or extension, or reimbursement of any sums paid in the event of termination of the contract for non-completion.
A non-accredited contractor must provide a completion bond. A financial organisation must undertake to pay the client the sum required to complete the dwelling. In practice, a third surety arrangement has evolved, whereby the client can deduct 5% from each invoice, paying that amount upon acceptance of the work. This amount may be paid in two halves: the first upon provisional acceptance and the second upon final acceptance. We consider this last case to be the best arrangement.
The King determines the nature and conditions of this bond, as well as the arrangements for providing information to the purchaser or client. In relation to this bond, the purchaser or client has a privilege that ranks immediately after the privilege provided for in Article 27(5) of the mortgage law.
13/ Any clause that is contrary to Articles 3 to 6 or 8 to 11 of the Royal Decrees adopted pursuant to Article 8(2) shall be deemed not written.
Non-compliance with any of the provisions of Article 7, Article 12 or the Royal Decrees adopted pursuant to those articles shall render the agreement or promise of agreement, or the clause that is contrary to the law, null and void.
The purchaser or client (to the exclusion of any other person) may choose to invoke either of these nullities in accordance with Article 1, prior to execution of the deed or, in the case of a works contract, prior to the provisional acceptance provided for in Article 9.
The deed must state that all the provisions of Articles 7 and 12 of this law have been complied with.
Therefore, invalid clauses do not automatically lead to cancellation of the contract. Depending on which articles of the Breyne Act have been breached, individual clauses can simply become invalid or (in the case of Articles 7 or 12) you, as the client, have the possibility of declaring the entire contract null and void before provisional acceptance.
14/ Any person who directly or indirectly violates the provisions of Article 10 by demanding or accepting payments shall be punished by imprisonment of between eight days and a month plus a fine of Û0.64 to Û4.96, or only one of these penalties.
The provisions of Book 1 of the Criminal Code, including Chapter VII and Article 85, are applicable to the violations referred to in this Article.
15/ This law is applicable to contracts concluded from the first day of the fourth month following the month of its publication in the Belgian Official Gazette.
Source : Tu bâtis je rénove