Reception of works and the developer’s refusal to accept the works

Introduction to the construction contract and concept of works acceptance

The construction contract has been defined by the Jurisprudence as an outcome obligation contract of a synallagmatic nature. By virtue of which, obligations arise for both parties, including the obligation to pay the price of the work. The above, obviously, once the work has been executed. So far, everything seems clear. However, in practice, there are millions of discrepancies that arise between promoters and construction companies to validate the works.

Thus, in the field of construction, our Law 38/1999 on Building Management (In Spanish “LOE”, Ley de Ordenación de la Edificación) provides for the figure of the reception. Although we will see its regulation and requirements later, we should first define what the reception of works consists of. It is, quite simply, an act by which the builder delivers the completed works to the developer. And the latter accepts them. This act can be done with or without reservations depending on what the parties have agreed in the contract. And, in addition, it will be able to include the totality of the works or, complete and finished phases.

Regulation of the reception of works

As we mentioned before, its regulation is found in the LOE, specifically in article 6. In it, it is required that the reception is materialized in a document signed by the parties containing the following mentions:

• Name of the intervening parties.
• Date of the final certificate of the entire work or of the phase that has been completed and finished.
• The final price of the material execution of the work.
• Whether the acceptance is with or without reservations. If applicable, the reservations should be specified. And, in addition, the term in which the defects must be remedied.
• The guarantees required from the constructor, for the purpose of insuring his responsibilities.
• The reception will be effective within 30 days from the date of completion. (Unless otherwise expressly agreed in the contract). The period shall start as soon as the promoter has been notified in writing. This acceptance will be tacit if, after this period has elapsed, the developer has not expressed any reservation or reasoned rejection.
• Finally, the computation of the warranty and liability periods begins when the acceptance report is signed. Or, when this is understood to be tacitly produced in accordance with the provisions of the previous point.

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Developer’s refusal to accept the works

In the same article that we quoted before, it is established that the promoter can refuse the reception because he considers that the works are not finished.  Or, on the grounds that they do not comply with the contractual conditions. However, the rejection must be justified in the minutes and a new deadline must be set to carry out the reception. And it is precisely here where the discrepancies mentioned above arise. Is it sufficient for the developer to consider that “the works are not finished” in order not to accept them? What is meant by reasoned rejection? Is it sufficient to state that there are “imperfections” or “poor finish”? Let’s see what the Jurisprudence says in this regard.

The Court of Appeals of Madrid, in many of its rulings, states the importance of giving reasons for the rejection of the acceptance. And it points out that it is not enough to allege the existence of “imperfections or poor finish”. As an example, its Ruling No. 229/2005 states that the developer has resorted to the comfortable position of alleging “poor finish”. When what it should have done, is to document the Act by which it refused the reception. In short, this is an excuse that cannot be accepted because it has no justification.

Also, in its Ruling 404/2012, it adds that the existence of defects or omissions is not a reason to deny the reception. And that only those defects that present a certain entity in relation to what was agreed could give rise to such refusal.

For its part, the Provincial Court of Cadiz has declared that the developer must comply with its obligation to accept the works. And that this can only be denied if the defects are of a certain importance in relation to the intended purpose. That is to say, that they make it improper to satisfy the interest of the former. Also, it cannot be denied when the poorly executed part lacks sufficient importance in relation to the rest of the well executed part. (Judgment 13/2012 of January 30)

Therefore, we can conclude that the promoter must thoroughly motivate the act that denies the reception. This seems reasonable, because otherwise, it would be enough to allege imperfections to delay the payment to the builders.

Conclusions

• In construction contracts, the biggest discrepancies arise with the delivery of the works and the acceptance of the promoter.
• The LOE provides for the figure of reception (whole or partial) of works. And that is defined as an act by which the builder delivers the works, once completed, to the promoter. And the latter accepts them.
• In its article 6, it is stated how the act of reception must be carried out. And that, in synthesis, it must be done by means of a signed Act that includes some obligatory concepts.
• The reception will be effective within 30 days from the date of completion. (Unless otherwise agreed). This period will be counted from the notification to the promoter. And it will be understood to be tacit if, after this period has elapsed, the promoter does not make any statements.
• The promoter may refuse to accept the works. But only when he justifies it with reasons. The jurisprudence has already declared that it is not enough to say that there are “imperfections” or “poor finish”. Nor can it be denied if there are defects lacking a certain importance. Or if what is poorly executed lacks sufficient importance in relation to the rest of the well executed.

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