Purchase and construction agreement

What we do

When a newly built home is purchased, a purchase and construction agreement is concluded between the parties. This agreement sets out the arrangements between the buyer and the contractor (often a project developer).

A purchase and construction agreement records all rights and obligations regarding the purchase of the plot of land (purchase agreement) and the construction of the home (construction agreement). A standard template is often used for the purchase and construction agreement. However, it is important that any deviating points in the agreement be legally reviewed. This includes agreements regarding construction time, additional or reduced work, suspensive conditions, resolutive conditions (subject to financing), guarantee and warranty arrangements, deviating provisions, and other information that becomes part of the contract (brochures, artist impressions, scale models, etc.).

The moment a dispute arises (or threatens to arise) during the development of a new-build home, it is advisable to seek legal advice immediately. This allows for an immediate assessment of the legal options. If a contractor or project developer is faced with a liability claim or complaint, our legal specialists can immediately help consider the possibilities.

Questions regarding the purchase and construction agreement? Contact us.

Purchase and construction in one: two legal regimes

The purchase and construction agreement combines two separate contracts into a single deed. The law of purchase applies to the land: the purchase of real estate by a consumer must be entered into in writing (Article 7:2 of the Dutch Civil Code), and the buyer has a statutory cooling-off period of three days. For the construction of the home, the law of contracts for work applies (Articles 7:750 and subsequent articles of the Dutch Civil Code). Because both regimes overlap, uncertainty often arises in practice regarding which rule takes precedence in the event of a dispute. Our lawyers and in-house counsel disentangle these two tracks and translate them into concrete rights and obligations, whether you are a private buyer or a developer drafting the standard contract.

Special protection for the construction of a dwelling (Articles 7:765 to 7:769 of the Dutch Civil Code)

When a natural person who is not acting in the exercise of a profession or business commissions the construction of a dwelling, the mandatory provisions of Section 2 of Title 12, Book 7 of the Dutch Civil Code (Articles 7:765 to 7:769 BW) apply. It is not permitted to deviate from these rules to the detriment of the consumer. For instance, Article 7:766 of the Civil Code stipulates that the agreement must be entered into in writing and that the consumer-client has a cooling-off period of at least three days. Furthermore, payment terms must correspond to the progress of the construction. For developers and contractors, this means that a standard model must carefully align with these mandatory rules; for buyers, it means that deviating provisions are often voidable.

The 5% rule and your right of suspension (Article 7:768 of the Dutch Civil Code)

One of the most important protections for the buyer is the right of suspension under Article 7:768 of the Dutch Civil Code: the so-called 5% rule. Upon completion, the buyer may withhold up to 5% of the contract sum and deposit it with the notary, instead of paying the amount to the contractor. This deposit remains available as leverage to have any defects repaired. The deposit is released three months after completion, unless the buyer notifies the notary in writing within that period that the amount must remain blocked, for example because repairs have not yet been completed. If the contractor has provided substitute security (often a bank guarantee), the option to deposit escrow lapses. We assess whether you are correctly invoking this right and prevent you from relinquishing your leverage too early.

Woningborg and SWK guarantees: security in the event of bankruptcy

Many new construction projects utilize a guarantee and warranty scheme from Woningborg or the Stichting Waarborgfonds Koopwoningen (SWK). Affiliated contractors are required to use a model agreement to which a warranty certificate is linked. This scheme offers two types of security: an insolvency guarantee (completion guarantee if the contractor goes bankrupt during construction) and a defects guarantee (repair or compensation for structural defects after completion). It is important to know which scheme applies, as the warranty periods and the claim procedure differ. We verify whether the warranty certificate aligns with your contract and guide you through the process of invoking the scheme.

Construction period, penalty clause, additional and reduced work

Disputes often arise regarding construction time and additional or reduced work. The agreement usually specifies a number of workable working days and links a penalty or delay clause to this. Additional and reduced work is regularly recorded in a separate schedule; if the contractor uses the UAV 2012, specific calculation rules apply. Unclear provisional items, verbal agreements regarding additional work, and discussions about what is included in the “basic contract” are classic sources of conflict. We review deviating provisions, construction time clauses, and additional work schedules in advance so that you are not faced with surprises, and we intervene if a dispute arises afterwards regarding the final settlement.

Delivery and liability for defects (Article 7:758 of the Dutch Civil Code)

Upon completion, the client accepts the work. Pursuant to Article 7:758, paragraph 3 of the Dutch Civil Code, the contractor is in principle released from liability for defects that the client should reasonably have discovered at the time of completion. Therefore, a thorough inspection accompanied by a completion report, including a list of visible defects, is crucial. However, the contractor remains liable for hidden defects and non-conformity (Article 7:17 of the Dutch Civil Code for the part governed by the law on sales). We advise on the inspection list, withholding the deposit, and issuing a timely and correct notice of default, so that your legal position is preserved.

Disputes: Arbitration Board or the civil court

In model contracts from Woningborg and SWK, the Arbitration Board for Construction Disputes is usually declared competent. This has implications for your litigation strategy: arbitration assessment differs from going to the civil courts. Sometimes a combination of avenues is possible, for example, invoking the warranty scheme alongside proceedings against the contractor. Our lawyers litigate before both the Arbitration Board and the ordinary courts and, together with you, choose the route with the best chance of success, whether you are the purchasing private individual or the developer being sued.

For both buyer and developer: from the baker on the corner to the international corporation

At MKB Juristen, lawyers and in-house counsel work together in mixed teams. This allows us to serve both sides of the table. If you are a private individual purchasing a new-build home, we review your purchase and construction agreement before signing and assist you should a conflict arise. If you are a project developer, contractor, or investor, we draft comprehensive model contracts, advise on the guarantee scheme, and defend you in the event of a liability claim. From the baker on the corner having his first commercial premises built to the international group with a large-scale area development: we operate at your level.

Part of our real estate law

The purchase and construction agreement is a specialty within our broader Real Estate Law. If there are other matters concerning your construction project or real estate, we also assist you with construction law issues, guidance during the purchase and sale of real estate , and the drafting of agreements. This ensures you have a single point of contact for your real estate issues.