Tips for signing a construction agreement

Construction is considered to be a risky business, especially when it comes to a foreigner’s decision to construct a residence in Greece. Choosing a contractor’s offer demands a good survey of the market, a trustful engineer and a legal counselor to draft the agreement.

You will often face up to practices like poor planning or use of wrong equipment, delays and breach of terms, failure to follow authorized procedures, so the construction agreement should be as detailed as possible to provide solutions to any issues that might arise.

Here are some summarized tips to help you deal with a construction project:

1. Appoint an engineer to inspect the contractor’s work.
2. Suggest that all supplies’ and workers’ invoices are issued in the contractor’s name and that he provides a total invoice for the total price of the construction.
3. Make sure the price quote includes vat and that the agreement is officially registered by the local tax office, since you will have to provide evidence in due course for the money you have spent on the construction and a copy of the agreement signed.
4. The construction price should definitely include ika fund expenses, that is the workers’ insurance, paid by the contractor monthly or when each work is completed to the local department of ika fund. Ask for ika update frequently to make sure it’s paid on time and that there are no debts pending. Each building is always registered to ika fund in the property owner’s name and not the contractor’s, so if any debts or unpaid contributions come up they burden you and not the contractor, even if you have paid him the amount corresponding to the amount owed.
5. The price should also include the expenses for the connection of the building to the electricity and water network.
6. Likewise, ask for a periodic review of all documents related to the construction (ika payments, suppliers’ invoices, etc.)
7. Try and get the most detailed description of the supplies, the materials etc. so that there won’t be any contest regarding the quality, the price, the aesthetics etc. of the ones used for the construction and make sure you have a full knowledge of the plans and the construction specifications.
8. Insist on specific deadlines for each stage of the construction.
9. Avoid changes in plans and specifications during construction which might cause a problem in the original construction bid and burden you with extra cost.
10. Ensure that you are indemnified by the contractor for its negligence, and that the indemnification clause covers "personal injury" or "damage to property other than the work itself” that is caused by contractor or his employees.
11. You should be aware that the agreement calls for the governing law to be the place of the project and that litigation/arbitration will occur in that same place.  Make sure you double-check the provisions related to construction law in Greece and the litigation process in case you are in the need of using it.
12. As far as the payments are concerned it’s advisable to leave a significant amount as the last installment to be paid to the contractor as soon as you have inspected the construction and have ensured all is done according to plans and all equipment, fixtures etc. work properly. In case you spot defects, malfunctions or any kind of problems the last amount kept till the end, can be used to solve these issues.
13. Try and get a “grace period”, the longer the better to have the capacity to check the construction with your engineer’s help before you sign the hand-over agreement and the building is delivered to you.
14. If the agreement is drafted by the contractor in Greek ask for an official translation in your language or appoint a translator or even better a lawyer with a good use of your language so that you will be fully aware of every single term of what you are signing.

Don’t hesitate to pose your queries to your contractor, take specific answers and have a constant and frequent contact. It will make things easier and will eliminate mistakes..

Good luck!

• buyer
• home owners