Contractors and the Renovation of Property
As land prices in prime locations in Thailand go up, condominiums are getting smaller and more expensive. Many people have chosen the option to purchase larger less expensive properties with the goal of renovating the property. There is a risk to making this choice. There is a lot of misleading and inaccurate information available when attempting to choose a contractor.
Locating a contractor to do the job within your price requirements can be difficult. Many contractors are unlicensed, do not have experience, and provide low estimates to obtain the job without the ability to complete the job. When researching contractors, it is important to review their references, talk to previous clients, and to physically view their work. It is easy for a contractor to point at a picture and say that it is their work.
Experienced contractors should provide drawings and architectural blueprints covering every square meter of the property with detailed renovation costs. If they cannot provide you documentation outlining what they will be doing as part of the renovation, they may be guessing at what needs to be done.
After selecting the contractor, it is important to sign an agreement that has a detailed timeline with milestones toward the completion of the project. The overall bill for the renovation should be split and paid after the contractor has completed each milestone in the project. While a deposit is generally required for materials, full payment should not be made prior to the contractor completing the project.
Diligence can prevent the hiring of an incompetent contractor but it does not guarantee good or complete work. What type of legal action can you take on the contractor in the following circumstances:
“You pay the contractor and during the middle of the work, the contractor leaves and does not return. The renovation is partially complete.”
Under section 599 of the Thai Civil and Commercial Code, when there is a delay in the delivery or the delivery of defective work by the contractor, the customer is entitled to withhold remuneration. This means that if there is a delay in the construction or if there is defective work, the customer can withhold payment until the work is completed or the defect has been fixed. In addition, if the work has not been completed, section 578 allows the customer to withhold all pay, terminate the contract, and sue for breach of the agreement to claim for damages.
“The contractor completes the work but you later find out that he skipped steps or used inferior materials.”
Under the Thai Civil and Commercial Code Section 589, the materials for work supplied by a contractor must be of good quality. If the contractor uses materials that are of an inferior quality than the materials agreed upon, the contractor is liable to repair for the defects that occurs. The contractor is liable for defects that appear within one year of completion of the work unless the agreement provides otherwise. However, the one-year limitation does not apply where the contractor intentionally attempted to conceal the defect.
“The contractor accepts the job then begins work on the renovation. In the middle of the job, he informs you that the costs of the renovation are higher than expected. He tells you that he cannot complete the job at the agreed upon price and demands more money.”
In the above circumstance, it is necessary to look at the agreement with the contactor. If there is a fix cost clause which prevents changes to the agreement, it can prevent the contractor request additional remuneration without consent of the customer. However, some agreements allow the contractor to request additional remuneration if there are material changes in the cost of the project.
So before signing any agreement, it is important to understand the clauses that relate to additional costs or expenses. If there are no clauses that concerns additional expenses, then the customer can force the contractor to incur the additional expenses by themselves and complete the work.
The above information is general in nature and should not be considered legal advice for any specific cases. If you have any questions, we advise that you seek legal counsel from a reputable lawyer.
By Robert R. Virasin and Yutthachai Sangsirisap
Mr. Robert R. Virasin is a licensed U.S. Attorney and managing director of Virasin & Partners. Mr. Yutthachai Sangsirisap is a licensed Thai Attorney. They can be reached at [email protected] or at www.virasin.com