How the Builders Fee Is Assessed

How the builder's fee is assessed

In the absence of an expressed agreement, the builder of a property in Cyprus is entitled to a reasonable fee for the work done, as George Coucounis describes.

Very often, minor building works are assigned to builders in order to carry out repairs, constructions or extensions in houses or other premises, even to build them. The builder or the contractor before undertaking to execute the building works, he visits and inspects the place, prepares a list for the works to be done and makes an offer to the owner according to which the builder’s fee is agreed, including work and materials.

During the execution of the works, the owner usually assigns extra works to the builder for which no fee was agreed. Another factor which is omitted to be agreed is the time for the completion of the works, even though the time is essential.

When the builder executes the works properly and there are no defects, the owner is happy and makes the payments, thus no problems arise. However, the situation is not always the same; the builder may not appear at the work despite the fact that the building works are taking place or when there is a delay in their execution, or even when defects and bad workmanship is observed. The same can happen when the owner omits to pay the builder and the latter has no alternative but to leave the works incomplete.

Normally, the issues which are raised in a dispute between the owner and the builder are the following: (a) what is included in the agreement between the parties, (b) what work has been executed, (c) who is to be blamed for breach of the agreement, (d) what damages can be claimed, and (e) what the reasonable cost for the extra work is.

In the case of minor building works, the legal principle applied is that the agreement may be partly in writing and partly oral. When the agreement is made in writing, it should be as precise and complete as possible so that to avoid the need for oral evidence for its meaning. With regard to the mode of payment, usually the builder is paid according to the progress of the work and he may also ask for a pre-payment for purchasing materials. In case the time is not agreed or defined in the agreement, there is an implied term that the agreement must be executed within a reasonable time. If there is a delay, any extra works asked by the owner are taken into account to justify the time spent.

The omission on behalf of the owner to pay the builder, despite his repeated promises, although the builder has given him reasonable notice to pay, makes him responsible for breach of the agreement.

In such a case, the builder is entitled to terminate the agreement and leave the works incomplete.

When the owner shows his intention not to pay the builder, the latter has the right to leave the premises without being responsible for any loss or damage to the owner. On the other hand, when the builder has completed the works and there is a balance owed to him, he is entitled to claim it from the owner as an agreed balance as well the cost for the extra works which he has executed.

The compensation that a builder is entitled in the event the work is left incomplete due to the owner’s fault normally includes the cost for the works executed plus the profit the builder lost from the incomplete works. The case law provides that in the absence of an expressed agreement, the builder is entitled to a reasonable fee for his work done.

Where there is faulty or incomplete work or defects, the owner is entitled to deduct their cost from the agreed amount. The builder’s claim must be precise and state in detail the work executed, whether it has been agreed or it is extra work as well as its cost. Therefore, the builder is obliged to write down the work executed daily in his diary so that his account to be correct and of no doubt.

Moreover, it is advisable for the builder to ask the owner to sign the account when the work is executed, independently of the time the amount due is to be paid. Thus, people avoid misunderstandings or disputes and the parties know where they stand, what their rights and responsibilities are, without the need for them to be taken to Court.