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2023-12-05

Case Studies | Joint Construction Contract | The builder is actually delaying the handover of the house!

 

【Definition of a Joint Construction Contract and its Different Methods of Collaboration.】

A joint construction contract is a cooperative model for real estate development between a landowner and a builder, the landowner provides the land and the builder is responsible for investment and construction. This type of cooperation, depending on the specific method of joint construction, can be divided into the following types:

Joint Construction Methods Simple Explanation
Subdivision Sale The landowner and the builder each sell the land and the building separately. Buyers need to sign separate purchase contracts for the land with the landowner and for the house with the builder.
House Division After the completion of the building, the builder and the landowner distribute the houses according to the agreed ratio, with each party either selling or holding the houses allocated to them.
Profit Sharing The two parties agree on the proportion of profit distribution after the sale of the real estate, and distribute the profits according to the agreed ratio, without the need for prior transfer of ownership.
Commissioned Construction The landowner fully entrusts a construction company with the building process, paying for the related construction and management expenses. This method is less common and is usually applicable when the landowner lacks construction experience.

 

Each joint construction method has its characteristics and applicable scenarios. When choosing a cooperation method, the landowner and the builder should consider their respective needs and expectations, and clearly agree on the rights and obligations of both parties in the joint construction contract. The legal nature of a joint construction contract is complex and may involve a mixture of contracts such as reciprocal contracts, sales, and contracting. Therefore, both parties should seek comprehensive legal advice before signing to ensure the legality and validity of the contract.

 

【Considerations at the Time of House Handover in a Joint Construction Contract】

During the handover process in a joint construction contract, i.e., the delivery of the completed building, it is important to pay special attention to the following key matters:

  1. Handover Procedure: Ensure that both parties have a mutual understanding of the time, place, and method of handover, and proceed according to the agreed procedure. This may include checking the quality of the construction and confirming compliance with building standards.

  2. Assignment of Responsibility: During the handover process, if any issues are discovered, it's important to clearly define the builder's scope of responsibility and ensure that the terms related to assignment of responsibility in the joint construction contract are clear and specific.

  3. Rights Transfer and Registration: The transfer of rights involved in a joint construction contract, such as the transfer of ownership of land and buildings, should be carried out according to the agreed procedure. And ensure that the related rights transfers are properly handled in the registration process.

  4. Strategies for Dealing with Non-Delivery by the Builder: In a joint construction contract, if the builder fails to deliver on time or the delivered building does not meet the agreed standards, the landowner should have a prepared response strategy. This may include resorting to legal action, seeking compensation, or activating the termination clauses in the contract.

【Case Background】

In 2011, Xiao Chen, who lives in New Taipei City, inherited a piece of land and happily cooperated with builder Lao Li, signing a joint construction contract. The agreement stipulated that Xiao Chen would provide the land, and they would jointly build a building.
 
After Lao Li completed the building and obtained the occupancy permit, he was supposed to register the preservation of the houses allocated to Xiao Chen and then transfer the registration to him.
 
However, before the handover of the house, Xiao Chen received a letter from the Construction Bureau stating that the house had been altered without permission and did not comply with building regulations. It needed to be rectified by the builder before the handover could proceed. Xiao Chen tried to contact Lao Li multiple times, but Lao Li ignored him, leaving Xiao Chen distressed and seeking legal assistance.
 
 

【Court Decision: Victory for the Plaintiff】

Under Article 767 of the Civil Code: "The owner may demand the return of their property from someone who possesses or usurps it without rights; may request the removal of obstacles to their ownership rights; and may seek to prevent potential infringements on their ownership rights."
 
Since the certificates of other rights for the land and building serve as documentary evidence of real estate rights, these documents inherently belong to the rights holder. In this case, Xiao Chen has already been registered as the owner of the house and the land on which it sits. The ownership certificate issued by the land administration office clearly indicates that Xiao Chen, as named in the certificate, is the rightful recipient of these rights.
 
Therefore, even though builder Lao Li never handed over the ownership certificates to Xiao Chen, this does not affect the fact that Xiao Chen is the rightful owner of the disputed property. After the transfer of ownership registration is completed, Lao Li is obliged to deliver or return the ownership certificates and hand over the house to Xiao Chen. Following Xiao Chen's appointment of our firm, we represented him, based on his status as the owner, in a civil lawsuit demanding that the builder hand over the disputed house and its ownership certificates. Ultimately, through our efforts, we won the case, allowing Xiao Chen and his family to happily move into their new home.

 

Reference：Civil Code

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