The Breyne Act protects buyers of a house or apartment which is yet to be constructed or under construction. This Housing Construction Act was introduced in 1971 as a result of the 1966 Etrimo case, in which many buyers experienced a financial drama. This was followed by the Breyne Act, which offers strong legal protection to anyone who has a house built, buys a house to be built or buys a house under construction. Landbergh briefly explains some of the main sections of the Breyne Act.
Which guarantees does the Breyne Act offer?
Limited advance payment and pay in instalments
The Breyne Act is a housing construction act which offers strong legal protection to anyone who has a house built, buys a house to be built or buys a house under construction. A first important part of the Breyne Act states that a buyer must pay a maximum of 5% of the purchase price in the private sale agreement as an advance on the land value.
The balance of the land value (the full amount after deduction of the advance) must be paid for when signing the notarial deed, together with the registration fees, preparation costs of the notarial deed and the share of the constructions that have been completed at that time, plus VAT.
In concrete terms, this means you only pay for what is physically present, i.e. your share in the land and the part of the construction which has already been completed. For this purpose, the construction is divided into sections, whereby an invoice is drawn up for each section – subject to formal approval from the architect – when it has been completed. This way, the payment of the total purchase price is spread over the entire construction period and buyer does not have to put the full sum in one go.
Example of a payment in installments for the construction as the works progress:
- Instalment 1 – 10% after the demolition and preparation for construction
- Instalment 2 – 10% after excavating the basement and pouring the basement foundation slab
- Instalment 3 - 10% after pouring the foundation slab of the ground floor
- Instalment 4 - 10% after installing the floor slab of the first floor
- Instalment 5 - 10% after installing the floor slab of the second floor
- Instalment 6 - 10% after roofing
- Instalment 7 - 10% after placing the exterior joinery
- Instalment 8 - 10% after placing the pipes and techniques
- Instalment 9 - 5% after placing the screed
- Instalment 10 - 5% after installing the sanitary appliances
- Instalment 11 - 5% after installing the kitchen
- Instalment 12 - 5% after the provisional acceptance
Parking space/car box/storage:
- Instalment 1 - 45% after pouring the floor slab of the underground floor
- Instalment 2 - 50% after pouring the floor slab of the ground floor
- Instalment 3 - 5% after the provisional acceptance
Guarantee in favor of the buyer
Under the Breyne Act, there is also a mandatory guarantee for the principal in favor of the buyer or client. This guarantee scheme protects you as a buyer or client against the financial inability of the principal who would burden you with an unfinished good. The form that this guarantee must take differs depending on whether or not the principal is a recognized contractor.
Guarantee from a recognized contractor
Under the Breyne Act, a recognized contractor must establish a deposit with the Deposit and Consignment Office for an amount of 5% of the total price of the building. When selling an apartment, the deposit must be calculated on the price of the apartment and not on the price of the entire building. This deposit is released in halves: the first half upon provisional acceptance and the second half upon final acceptance.
Guarantee from a non-recognized contractor
Under the Breyne Act, an unauthorized contractor must provide a guarantee through a financial institution. This guarantee corresponds either to the total amount required to complete the works specified in the contract (completion guarantee) or to the repayment of the amounts paid upon dissolution of the agreement (refund guarantee). In case of an apartment, the term 'completion' does not only refer to the private parts, but also to the common parts that are necessary for the normal habitability of the apartment.
The Breyne Act also states that the delivery must be divided into two phases: the provisional and final delivery. There must be at least one year in between, in order for you to check whether the property can withstand all seasons without defects. All visible and hidden defects must therefore be reported during this period. In addition, the client, the architect and the contractor(s) are liable for additional serious visible and hidden defects that jeopardize the stability of the building for ten years after the provisional acceptance.
The Breyne Act in short
Besides having the option of making adjustments to the layout and materials, and enjoying the convenience of not having to follow up works themselves, buyers of a house or apartment which is yet to be constructed or under construction profit from strong legal protection thanks to the Breyne Act. The Breyne Act is a housing construction act that guarantees that you can pay the total purchase price spread over time, that you only pay for what is physically present, that you are covered against the financial inability of the project manager, that defects can be reported for at least a year and that you are not liable for serious visible and hidden defects during ten years.
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