Developer and Construction - A Flat That Does Not Yet Exist, and a Contractor Who Changes the Estimate
Buying off-plan is the only real estate transaction where the buyer pays for something that does not exist and the seller writes the contract himself. That is why developer disputes are the most numerous in real estate: delivery runs a year and a half late for "objective reasons", the flat is 4 square metres smaller, the quality does not match the render, and the penalty in the contract is symbolic or absent altogether. And from the other side: building a private house with a contractor, where the estimate doubles and the timeline triples.
This page describes how a lawyer protects the buyer before and after the contract with the developer: which clause is decisive, how the penalty for delay is calculated and when rescission is worth it, how a quality defect is proved and how long the warranty runs, what happens if the developer becomes insolvent, and how a construction contract with a contractor is written so the house is built within the estimate. For developers and contractors: protection from unfounded claims.
Updated · Practice area: Real estate lawyer
The Developer's Contract Clauses That Later Decide Everything
The developer's template is written in the developer's interest. The lawyer's work before signing is to change these clauses or, at the least, to understand their risk.
Late Delivery - From the Penalty to Rescission
Checking the deadline and the ground for extension
What date was agreed, whether the developer exercised the extension right in writing and on a contractual ground, whether the "objective reason" (force majeure) is real: a permit delay, a change of contractor and financial difficulty are not force majeure. The lawyer fixes the exact date the delay began.
Calculating and demanding the penalty
The contractual penalty for every day; where there is none or it is symbolic, damages: rent paid during the delay, loan interest on a useless flat. A written demand to the developer, who often offers a discount or compensation to avoid a lawsuit and "waking up" other buyers.
The rescission decision
On a long delay the buyer may rescind and recover what was paid, with damages. But rescission is rational only if the developer has the resources to refund and the market price has not risen; otherwise the buyer loses a discounted flat and recovers the money over years. The lawyer runs this calculation before rescinding.
Collective action
A joint demand or claim by buyers in the same building puts far more pressure on the developer and shares the cost. The lawyer brings the buyers together, builds a common position and protects individual claims in parallel.
Security and enforcement
A claim for the penalty or a refund with attachment of the developer's assets: unsold flats, land, accounts. A developer's assets are often mortgaged to a bank; the lawyer checks priority in advance and seeks security over unencumbered assets.
The Flat Was Delivered and the Defect Appeared Later - Warranty, Expert Evidence and How Long the Developer Remains Liable
The developer is liable for defects in a delivered flat for the contractual warranty period and, absent one, for the statutory period; limitation for construction work is longer than for an ordinary sale. Structural defects (cracks in load-bearing walls, waterproofing, the roof), engineering (heating, ventilation, electrics), the facade and common areas remain the developer's responsibility for years, even if the flat was "accepted" by an act. The act only "closes" obvious defects.
Proof comes from a construction-technical expert report: the nature of the defect, its cause (design, materials or workmanship), the cost of repair, compliance with standards and the project. The report must come before repair, because a repaired defect "no longer exists". Remedies: repair by the developer within a deadline, or reimbursement of your own repair, or a price reduction; for common-area defects, in the name of the association or a group of owners.
A separate category is non-conformity with what was promised: the render and the brochure are not part of the contract unless attached, but an advertising promise grounds a misleading-practice claim under consumer law. A "premium building" without balconies, a "park in the courtyard" that turned into parking: the lawyer analyses the contract, its annexes and copies of the advertising together, before the promise is deleted from the website.
Developer Insolvency and Other Risks to Check Before the Contract
- Permit and land
- A construction permit for exactly this project, the land owned by the developer or under a long lease, encumbrances on the land (a bank mortgage: where does the buyer rank). A flat "under construction" without a permit cannot be the subject of a contract.
- The bank's mortgage and the buyer
- The project is built with a bank loan and the land and building are mortgaged. Buyer protection: the bank's consent to release the flat from the mortgage on full payment, in the contract or by a bank letter. Without it, a paid-for flat can end up in the bank's foreclosure sale.
- Escrow and staged payment
- Money in an escrow account released by stage, or at least staged payment against independently confirmed construction progress. Full prepayment in exchange for a "discount" is the maximum risk.
- Developer insolvency
- In bankruptcy the buyer is a creditor; one with a registered right is in a better position than one with only a contract. A group of buyers can organise completion of the construction or demand transfer of the project to another developer. The lawyer represents the buyers' interests collectively in the bankruptcy.
- Commissioning
- Registration of the flat as property only after the building is commissioned; a "delivered but not commissioned" building can stay that way for years. The contract needs a commissioning deadline and a penalty for missing it, separate from delivery.
Building a Private House - What a Construction Contract With a Contractor Must Contain
- The project and the estimate as annexes to the contract, with a detailed list of works and materials: "a 200 sq m house, 150,000 lari" guarantees a dispute.
- The type of price: fixed (changed only by supplementary agreement) or cost-based with a cap; who bears the risk of materials rising in price.
- Stages with deadlines and staged payment after the acceptance act for each stage: by result, not by calendar.
- The quality standard (codes, the project) and acts for hidden works (foundation, reinforcement, utilities) with photos before they are covered.
- Liability: a penalty for delay, a deadline for fixing defects and a warranty after completion, safety and workers' injuries on the contractor.
- A termination rule: valuation of and settlement for work done, handover of the site and documents, the cost difference of completion by another contractor.
Three Developer and Construction Disputes
20 months late with a "0.01%" penalty
The contract capped the penalty at 3%; delivery was 20 months late and the buyer was paying 800 lari in rent. Lawyer: a penalty cap does not exclude a damages claim above it, the rent documented; a joint demand by 14 buyers. The developer offered everyone the rental equivalent and a new fixed delivery date with a penalty.
A flat 5 sq m smaller "after measurement"
78 sq m in the contract, 73 on measurement; the developer said "that was the design area, a change is permitted". Lawyer: a 6% deviation is material, no permitted tolerance was written in, the price per square metre follows from the contract. A proportional refund and a penalty; no rescission was needed.
A contractor who raised the estimate by 70%
A house at 180,000; in month 8 the contractor demanded 305,000 for "materials" and stopped work. Lawyer for the client: the contract was fixed-price, changes only by agreement; an expert report on the value of work done and defects; termination and a claim for the cost difference of completion by another contractor. The contractor handed over the site with documents and covered the cost of the defects.
Questions About Developer and Construction Disputes
The developer says the delay is force majeure: the pandemic, the war, the exchange rate. Is that right?
Force majeure is only a circumstance named in the contract or treated as such by law, which directly and unavoidably prevented performance and which the developer notified in time. General economic difficulty, material price rises, contractor problems and permit delays are not force majeure. The lawyer checks the contract's force majeure clause and the developer's notices.
I accepted the flat and signed the act, and now cracks are showing. Did the act take away my rights?
No: the act "closes" obvious defects, not hidden ones. Cracks, leaks and engineering faults you could not see at acceptance are the developer's responsibility within the warranty period. Written notice, an expert report before repair, a deadline for repair, and a lawsuit if there is no response. "No claims" in the act does not extend to hidden defects.
I have paid 60% and the developer has not continued construction for 8 months. Should I rescind?
First check the developer's position: does it have the resources to refund (assets beyond the bank's mortgage), are other buyers already suing, are there signs of bankruptcy. Rescission and a claim with attachment if there are resources; if not, organising a buyers' group to achieve completion or transfer of the project is often a more realistic route than individual rescission.
The brochure showed a courtyard, a park and a playground; in reality it is parking. Can I do anything?
If the brochure or render is an annex to the contract, it is a direct breach. If not, it is a misleading commercial practice under consumer law: a complaint to the Competition Agency and a claim for a price reduction or damages. The key is to keep a dated copy of the advertising (screenshot, brochure, video); developers change brochures after delivery.
I am a contractor; the client is withholding the last 25% over "quality" but is already living in the house.
Actual use is strong evidence of acceptance. Lawyer for the contractor: stage acts, photos of hidden works, a record of the client's refusal to sign acceptance, an independent expert report on the quality and value of the work; a claim for the balance with a penalty. The cost of the client's genuine defects is set off against the balance, and it is usually far less than 25%.
Lawyers for Developer and Construction Disputes
A dispute with a developer is won on contract clauses, expert evidence and joint pressure from buyers; one with a contractor, on stage acts. Within 15 minutes the coordinator connects you with a lawyer who handles construction disputes for buyers, clients or contractors.
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