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Our colleague Petra Lindhout wrote the following annotation for the journal Milieu & Recht (2024/31) on a ruling by the Court of ’s-Hertogenbosch dated 28 November 2023, which focused on liability for groundwater nuisance resulting from the execution of a construction project. In the annotation (included after the court's ruling), she discusses the municipality's liability for water nuisance and the extent of the municipality's duty of care and investigation in the execution of development projects.

M en R 2024 31 – Higher Groundwater Level Due to Construction Project; Municipality and Developer Liable for Tort.

Due to an amendment to the Civil Code effective from 1 January 2024, the position of clients in construction projects has been strengthened. In our first blog in the series ‘The Position of the Client in Construction Projects,’ we discussed the client’s position in relation to post-completion liability. The second blog in the series addressed the contractor’s financial information obligation. The third blog covered the contractor’s duty to warn and the changes therein.

However, there are more changes that clients and contractors need to consider. In this blog, we focus on the contractor’s obligation to provide a so-called ‘completion dossier’ for the handover.

It is important to note that the completion dossier is not the same as the ‘authority dossier’ that the initiator of a construction project must submit to the (usually) municipality, allowing them to verify that the construction complies with legal standards. The ‘authority dossier’ must include a statement from the quality controller asserting that there is justified confidence that the construction has been built according to legal standards. But what exactly is the ‘completion dossier’?

The Completion Dossier

Article 7:757a of the Civil Code stipulates the obligation of the so-called ‘completion dossier’. The article states:

‘In the case of a construction contract, the contractor must provide the client with a dossier relating to the completed construction at the time of the notification that the work is ready for completion, as referred to in Article 758(1). The dossier must contain data and documents that fully inform the client of the contractor’s compliance with the agreement and the work performed in this regard and must include at least:

• Drawings and calculations related to the completed construction and associated installations, as well as a description of the materials and installations used, and the functions of the construction.
• Data and documents necessary for the use and maintenance of the construction.’

This ‘completion dossier’ is often referred to in practice as the consumer dossier, but this can be misleading. The obligation applies to all construction contracts, not just those with private clients. Therefore, we prefer to call it the completion dossier.

First, it is important to note that this legal requirement for the contractor to provide a completion dossier can be deviated from contractually. There are no restrictions on contractually deviating, even for private clients. Thus, parties are free to make their own agreements about a possible completion dossier and its contents.

Moreover, the obligation to provide a completion dossier only applies to construction contracts. For other types of contracts, such as dry cleaning, this provision does not apply.

If parties have not agreed otherwise contractually, the contractor must provide a completion dossier at the notification that the work is ready for completion. This does not have to be the same moment as the completion itself. The completion dossier must be provided before the completion, as the moment of 'notification that the work is ready for completion' is the reference point.

The regulation further specifies that the completion dossier must include at least the drawings and calculations of the completed construction and associated installations. It must also contain a description of the materials and installations used and the functions of the construction. Finally, the contractor must include data and documents necessary for the use and maintenance of the construction in the completion dossier. The purpose of the legal regulation is to encourage contractors to deliver a defect-free construction and to ensure that clients have relevant information for the use, maintenance, and potential future modifications of the construction. However, providing a completion dossier does not eliminate the contractor’s liability for (hidden) defects. For more information on the contractor’s liability, we refer to our first blog.

As outlined, parties are free to make other or additional agreements about the contents of the completion dossier. The goal of the completion dossier is to provide a ‘complete insight’ into the fulfillment of the construction contract. It is unclear when this is the case. It is possible that the contractor provides the data specified in Article 7:757a BW but still does not provide ‘complete insight into the fulfillment of the agreement’ under the specific circumstances. How this obligation will be practically applied remains unclear and will need to be clarified by case law.

The law does not specify ‘how’ the completion dossier should be provided. This means the contractor can provide a paper dossier or a digital one.

Professional parties often know what information and documentation they expect and make agreements on this, possibly with their legal advisors, when entering into the contract.

For private clients, this may differ. Even the contractors' trade organizations found the legal rule not always clear. At the request of the Ministry of the Interior and Kingdom Relations, a practical guideline (NEN – Dutch Practice Guideline NPR 8092) was developed together with the construction industry and consumer organizations. This guideline can provide support in making agreements to achieve a good completion dossier for private clients. You can find this practical guideline via this link NEN Practice Guideline.

But does a contractor need to provide a completion dossier for a project that started before 1 January 2024? Parties made agreements before the legal regulation took effect. A special transition arrangement has been established for such situations. The completion dossier does not need to be provided for construction contracts concluded before the entry into force of Article 7:757a BW, that is, before 1 January 2024.

If you have any questions or need legal assistance after reading this or the previous blogs in this series, please contact Petra Lindhout or Erwin den Hartog from our office.

A Step Towards a Greener and Healthier Urban Landscape

We are thrilled to share that, with the Green Cables project, we have successfully greened our facade! This project not only enhances the aesthetics of our building but also contributes to a healthier and more sustainable urban environment.

Benefits of a Green Facade

By greening our facade, we achieve several important benefits:

• Improved Air Quality: The plants on our facade help filter pollutants from the air and produce oxygen, resulting in healthier air quality around our building.
• Reduction of Heat Stress: Green facades absorb less heat than traditional building materials. This means they help lower the temperature in the immediate surroundings, which is particularly beneficial during hot periods.
• Enhancement of the Urban Landscape: Our green facade contributes to a more beautiful and attractive streetscape, positively affecting the mood of both passersby and our employees.

Native Climbing Plants: Sustainable and Biodiverse

We specifically chose native climbing plants. These plants are perfectly adapted to our local climate and soil, meaning they require less maintenance and are more resistant to diseases. Additionally, they promote local biodiversity by providing a habitat for native insects and birds.

How We Did It

The realization of our green facade involved several steps:

1. Design and Planning: In collaboration with an experienced landscape architect, we developed a design that is both functional and aesthetically pleasing.
2. Facade Preparation: We installed climbing supports and an efficient irrigation system to give the plants the best start.
3. Planting: We carefully selected native climbing plants, which now cover our facade with lush greenery. Now, they just need to grow!
4. Maintenance and Monitoring: Our gardener, Van der Mee & Jansen Hoveniers, provides regular maintenance and monitoring to ensure the plants remain healthy and can grow optimally.

Our Commitment to Sustainability

This project is an important step in our ongoing commitment to sustainability. We believe that businesses play a crucial role in creating a more sustainable future, and we are determined to do our part. By investing in green infrastructure, we hope to set an example for other companies and organizations. Our next step is installing solar panels.

Thanks to Our Partners!

For this greening project, we were supported by several partners, to whom we express our great appreciation! Thanks to the Province of South Holland (Executive Council) for subsidizing the Green Cables project, Stichting Greendustrie (Hugo Kranenberg), and the Green Business Club Fascinatio (Vincent Dellebeke and Denise Fransen) for their guidance on the project, and De Verticale Tuinman for their quick and professional execution!

Together, we can make a difference and work towards a greener, healthier future for everyone.

Strengthening the Position of Clients in Construction Projects – Blog III

Due to an amendment to the Civil Code effective from 1 January 2024, the position of clients in construction projects has been strengthened. In our first blog in the series 'The Position of the Client in Construction Projects,' we discussed the client's position in relation to post-completion liability. The second blog in the series covered the contractor’s financial information obligation. In this third blog, we address the contractor’s duty to warn, which has also changed concerning construction contracts.

Duty to Warn for All Types of Work Contracts

Until 1 January 2024, the duty to warn was legally stipulated in Article 7:754 of the Civil Code and included the following obligation for the contractor:

‘The contractor is required, when entering into or executing the contract, to warn the client of any inaccuracies in the assignment, to the extent that he knew or should reasonably have known of them. The same applies to defects and unsuitability of items provided by the client, including the land on which the client has the work carried out, as well as errors or defects in the plans, drawings, calculations, specifications, or execution instructions provided by the client.’

This duty to warn has not changed. It applies to all types of work contracts, including, for example, dry cleaning services. It is important that parties may deviate from this legal provision and make different arrangements in their specific contract.

In construction contracts, the duty to warn follows the contractor’s initial obligation in a project: to assess whether he can properly execute the work requested by the client. The contractor must evaluate the client's request and determine the appropriate execution process (materials, equipment, methods, etc.). He will want to align these with the client's requirements and the provided data. The contractor does not have an independent obligation to verify the accuracy of the client's requirements or data. However, if the contractor discovers that the requirements or information are insufficient or incorrect while determining a suitable execution process, he must warn the client!

This warning is important because if the contractor fulfills his duty to warn (and there are no other reasons for his failure), the consequences of defective work execution will fall on the client (Article 7:760, paragraphs 2 and 3, Civil Code).

Specific Duty to Warn for Construction Contracts

For construction contracts, a new rule now applies. The second paragraph of Article 7:754 of the Civil Code states:

‘For construction contracts, the warning referred to in paragraph 1 must be given in writing and unequivocally, and the contractor must timely inform the client of the potential consequences for proper fulfillment of the agreement. This paragraph cannot be deviated from to the disadvantage of the client if the client is a natural person not acting in the course of a profession or business.’

In construction contracts, the contractor must give the warning in writing and unequivocally. In the digital age, ‘in writing’ is a broad term, encompassing email or messaging apps. The warning itself must also be clear (unequivocal). What constitutes clarity depends on the specific circumstances, but it is crucial that there is no ambiguity about whether the contractor has fulfilled his duty to warn. Despite project time constraints, it is advisable to pay sufficient attention to clearly wording and appropriately delivering the warning.

If the written and unequivocal warning requirements are met, there is still another condition the contractor must satisfy. The contractor must inform the client of the potential consequences for proper fulfillment of the agreement. This must be done ‘timely,’ as stated by law. The legal commentary does not fully clarify what ‘informing of potential consequences for proper fulfillment’ means, but in practice, it might include warnings about additional costs (from unchanged continuation) or the need for unusual measures to avoid risks to third parties due to errors in the assignment.

Finally, it is important that the duty to warn in construction contracts cannot be deviated from to the detriment of a consumer client. Non-professional clients are thus given extra protection. If you exclude the duty to warn as stipulated in Article 7:754 of the Civil Code in a construction contract with a private client, you risk that the consumer client can always invoke this article. A differing agreement is, in principle, void.

If you have any questions following this blog, please contact Erwin den Hartog or Petra Lindhout from our office.

Financial disclosure obligation

The Civil Code was amended from 1 January 2024 such that the position of the principal in construction projects was strengthened. In our first blog in this series, we discussed the position of the principal in relation to post-completion liability.

In this second blog, we discuss the financial disclosure obligation of the contractor in private contracting introduced from 1 January 2024.

New construction of owner-occupied houses for private individuals is overwhelmingly (around 90%) built under a guarantee and warranty scheme of the Garantiewoning Foundation. Such a guarantee and deposit scheme offers protection to consumers against possible insolvency of the contractor during construction. If the contractor goes bankrupt, another contractor will still build the house. In addition, such a guarantee and warranty scheme offers a construction guarantee which means that if there are construction defects and the contractor is unwilling (or unable) to remedy them, they can still be repaired.

Nevertheless, around 10% of new construction houses are still built without such a guarantee and warranty scheme. This may be because a contractor does not wish to join such a guarantee scheme or because the construction (home) is uninsurable, for example because of a highly innovative technique being used. Business clients are expected to be able to be well informed about the risks involved. However, orders from private clients are subject to a specific information obligation that the contractor must comply with.

Additional protection applies when building a new home for private clients with effect from 1 January 2024. Article 7:765a of the Civil Code states:

1. Before the principal is bound by an agreement as referred to in Article 765 or by an offer to that effect, the contractor shall inform the principal unequivocally in writing whether and, if so, in what way the fulfilment of his obligations to perform the work and his liability for defects attributable to him are or will be covered by insurance or another financial security. This information shall be provided in a clear and comprehensible manner for the client and shall in any case include the scope of the insurance or financial security, the degree of cover, the term and the sum for which the insurance has been taken out or the financial security has been provided.
2. The information referred to in the first paragraph shall form an integral part of the agreement.

The contractor must therefore inform the private client in writing prior to the conclusion of the contract (to build a new home) and in a manner that is clear and understandable as to whether he has insurance or can provide some other form of financial security for his obligations under the contract to build. And if so, he should inform the client about some key elements of this insurance/security. It should be clear what the extent of the insurance or financial security is, what the coverage level is, how long the insurance or security is provided and up to what sum the insurance or security applies.

The legal provision, as indicated, is mandatory. It cannot be deviated from. Not even in general terms and conditions. The information provided by the contractor is considered an integral part of the agreement to build the new home.

The private client is thus given additional protection. After all, with the information provided, he can check whether the contractor is actually insured (or can provide security) and in what way. Note that the provision only applies when building a house, not for building other structures.

For its part, the contractor will want to be able to prove that it has complied with the information requirement, especially if it cannot provide any or sufficient security/insurance. With the insurance information having to be provided prior to the conclusion of the contract, it is advisable to ensure an acknowledgement/statement of receipt.

Indeed, a private client can dissolve the contract if the contractor has not fulfilled the obligation to provide information, because the contractor then fails to fulfil the contract. Depending on the situation, a claim for damages (Section 6:277 of the Civil Code) also follows such a dissolution. If the contract does remain in force (and is therefore not dissolved), there may also still be a claim for damages based on a failure to perform the contract because of a breach of the duty to provide information (Section 6:74 of the Civil Code). It is therefore important as a contractor to ensure that one can prove that one has complied with the obligation to provide information.

Finally – depending on the circumstances – the private client can invoke error (Article 6:228 of the Civil Code) or conflict with the law (Article 3:40(2) of the Civil Code) and annul the contract or bring a claim based on tort (Article 6:162 of the Civil Code).

Do you have any questions following this blog? Please contact Erwin den Hartog or Petra Lindhout from our office.

Special Expropriation Law – Blog IV: Compensation for Third Parties

When you, as the owner of a plot, are expropriated, it is naturally logical that you are compensated. However, owners are not the only parties who can suffer damage from expropriation. Third parties can also experience losses. In this fourth and final part of the special blog series on expropriation, we address the situation of these groups.

In the first blog, we discussed the change effective from 1 January 2024, shifting from expropriation via a Crown decision to expropriation via an expropriation order and the associated administrative procedure. In the second blog, we covered the criteria for expropriation. The third blog focused on the procedure for determining compensation. Finally, in this last blog, we explore compensation for third parties.

Based on the 'clearing effect' of the registration of an expropriation deed, all charges and rights attached to the expropriated property are lost upon registration. The damage caused to those whose names those charges and rights were registered under is called third-party damage. The extent to which third parties can claim compensation for expropriation is provided by law.

Although expropriation is initially thought to only cause damage to the owner of the expropriated property, many more people can suffer losses due to expropriation. For example, the expropriated property could be a house rented to third parties. These third parties must vacate the house before the lease term expires and must find alternative accommodation.

Additionally, the property owner may not be the property occupant. For instance, if the property owner allowed a family to live in the house decades ago, and the grandson of this family eventually occupies the house believing it to be his own, expropriation reveals otherwise. The grandson suffers a loss as he no longer has a home and must find new accommodation.

A third and final example is the right of way. The owner of the 'dominant estate' has agreed with the owner of the 'servient estate' to use a path across the servient estate to access their home. When the servient estate is expropriated, this right of way is nullified. The owner of the dominant estate then has a problem as they can no longer access their home, thus suffering a loss due to the expropriation.

Now, let’s examine the legal basis for compensating third parties, such as tenants, occupants, and owners of dominant estates.

Legal Basis for Third-Party Compensation

Article 15.27 of the Expropriation Act (Ow) is a so-called linking provision. This means that this article extends the application of Articles 15.17 to 15.26, which primarily apply to owners, to the list of persons specified in this article.

Article 15.27 Ow provides an exhaustive list of persons who also have the right to compensation after expropriation. These include:

• Leaseholders
• Building right holders
• Owners of a dominant estate
• Right holders to use and habitation rights
• Right holders as per Article 150(5) Transitional Act New Civil Code
• Occupants
• Tenant buyers
• (Sub)tenants
• (Sub)leaseholders
• Creditors as per Article 6:252 of the Civil Code

Anyone not listed in this exhaustive list in this article generally has no independent claim to compensation for expropriation. Generally, because in some cases, it is still possible to be compensated if not included in the exhaustive list. For example, the mortgage holder and the registered lien holder can file a statement of defense in the compensation procedure to have their losses compensated.

To illustrate, let’s explain how tenants are compensated.

The Tenant

The tenant is generally entitled to full compensation. This is different if the lease was entered into after a draft expropriation order was published. In that case, the tenant has no right to compensation but can claim damages from the landlord.

The strength of the tenancy affects the amount of compensation. A capitalization factor is used, which is the annual rent divided by the purchase price of a property. Generally, a capitalization factor of 7 is used, but a lower factor applies if the tenancy is weaker, such as when the lease term is nearly complete. It must be considered whether the tenancy would have continued beyond the lease term. If so, factor 7 is used; otherwise, a lower factor applies.

Conclusion

In conclusion, not only owners but also third parties can be compensated. However, this only applies to those listed in the exhaustive list of Article 15.27 Ow. If a person is not listed, they generally have no independent claim to compensation for expropriation. Generally, because there are some cases where compensation is still possible.

This concludes our special blog series on expropriation. We have aimed to explain the expropriation process as clearly and simply as possible in four blogs. If you have any questions about the expropriation process after reading this blog series, please contact Gerard van der Wende, Petra Lindhout, or Fleur Huisman.