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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. After being originally passed in 1971, this law was amended in 1993. The Breyne Act governs the construction of residential buildings and the sale of houses that have yet to be built or are in the process of being built. Here, we will focus on the key points and most confusing aspects.
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:
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:
2/ This law is not applicable to agreements concluded by:
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:
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.
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.
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.
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.
This point is expanded upon in the implementing decrees, below.
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.
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 (initially the 1971 decree and, as with the amended law, the 1993 decree). 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:
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 https://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.
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.
For those interested, here is a brief explanation of the revision formula that you will come across in many standard contracts.
p represents the revised price, calculated as follows:
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.
Therefore, over six months, the cost of the building has increased by nearly 3.8%.