Corona and construction activity: interesting facts for the real estate industry
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Corona and construction activity: interesting facts for the real estate industry

The current legal situation expressly allows construction companies to maintain the work. The Federal Ministry of the Interior, for Building and Homeland has emphasized the importance of continuing construction work. Nevertheless, the restrictions and the associated economic uncertainties are also leaving their mark on the construction industry and ancillary building trades. We have compiled interesting facts for the real estate industry.

Health protection also has top priority on construction sites

With regard to health protection, building owners and contractors are under obligation. They must ensure that all measures prescribed by law to protect the population against infections are implemented as well as possible on construction sites.

This includes the well-known hygiene rules: Coughing and sneezing in the crook of your arm, regular hand washing and the compulsory observance of the prescribed minimum distance. The building owner must continuously point this out and monitor compliance. A delegation to the appropriate specialist companies is possible.

Can a customer stop payments if he gets into financial difficulties due to the Corona crisis?

This is only possible in individual cases. The „Law on Mitigation of the Consequences of the COVID 19 Pandemic in Civil, Insolvency and Criminal Procedure Law“ passed by the Bundestag on 27 March provides for a deferral of payment in Article 240 EGBGB only for consumers and micro-entrepreneurs.

Customers may only refuse payments in a „material continuing obligation“. By this the legislator means elementary circumstances such as the supply of electricity, gas and water. For micro-enterprises, this includes all business that they absolutely need to continue their operations.

These regulations do not apply to construction contracts, as in most cases they are not continuous obligations. Therefore, the right to refuse performance does not apply to construction.

Are missed deadlines automatically extended due to staff shortages?

Not as a general rule. A contractor may invoke force majeure and must justify why he cannot provide his services. In this case, the client is not entitled to claim damages or compensation.

From a legal point of view, the Corona crisis can be included under the concept of force majeure. It is also conceivable that contracts concerning the legal institution can be adapted to the loss of the basis for the transaction – especially with regard to contractually agreed deadlines.

Does the principle of force majeure apply if employees or relatives are ill with Corona and are therefore not allowed to work?

This principle is only applied if a construction company is temporarily closed due to the pandemic or if a large number of employees are in quarantine.

In this case, however, the building contractor must seek replacement workers or subcontractors. Only if he cannot find a replacement can the principle of force majeure take effect. If this is the case in an individual case, the execution deadlines are automatically extended for as long as an obstruction persists. The time required to restart the stopped work is also added to this.

Example: A contractor can no longer buy building materials because his supplier is in quarantine

Then the performance of a work service can become „impossible“ and thus the obligation to perform is also cancelled. This also applies, by the way, if the service could only be rendered with disproportionately expensive means. In these constellations, creditors are also released from their payment obligations.

From a legal point of view, the Corona pandemic is a temporary reason – even though we all do not yet know how long it will last. This means that even obstacles to performance will only delay the construction process and not prevent it altogether. There are other special details which we would be happy to check for you in individual cases-.

Our assessment

In principle, it is possible to continue construction work under the current contact ban. However, there may still be deviations from contractually agreed deadlines.

In any case, it is then important to have comprehensive documentation as to why the deviations occurred. You should inform your contractual partner as soon as possible.

Please contact us at any time if you have any questions!

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