As a contractor in Norway, have you experienced that your project is nearing completion, but the paperwork is standing in the way of handover and final settlement? For both you and the client, a temporary use permit (in Norwegian: Midlertidig Brukstillatelse) or completion certificate (in Norwegian: Ferdigattest) is crucial for the project to be legally taken into use and completed in an orderly manner. Below is an overview of your rights and obligations as a contractor, as well as what to look out for as the completion date approaches.
What is a temporary use permit?
A temporary use permit allows the client to occupy the home/building while the last part of the work is still in progress, if only work that does not threaten health and safety remains. This can be beneficial if the interior work is complete, but exterior details or associated buildings (e.g., garage) remain. The temporary use permit is time-limited, so you as a contractor must finalize and apply for a completion certificate before the deadline expires - or hope that the municipality can grant an extension.
FACING ISSUES IN YOUR CONSTRUCTION PROJECT?
Our experienced construction law lawyers are here to help. Reach out today!
What is a completion certificate?
A completion certificate is confirmation from the municipality that the project has been completed in accordance with the permit that was granted. It is based on documentation such as declarations of compliance from you and any other contractors. According to the Planning and Building Act, a completion certificate must be issued for all measures requiring an application when the work is completed. For the client, the completion certificate means that the building is officially ready for legal use.
Can you withhold documentation in a construction project?
If the customer fails to pay as agreed, and this happens without there being a valid reason for the suspension of payments, you as a contractor can stop the work - including the work with the necessary final documentation. Before you do this, you must send a notice of suspension of work and give the client a reasonable deadline to pay. If the payment is still not in order when the deadline expires, you have the right to withhold further work on the documentation, which also prevents an application for a temporary use permit or completion certificate.
Please note: If the customer has a legitimate reason for withholding payment, this should not be considered a payment breach. In that case, you risk incurring liability for delay, including a daily penalty, if you stop the documentation work without justification.
Furthermore: Always read any contract, as this may be regulated differently in different contracts. It may also be regulated differently in relevant legislation such as the Craftsman Services Act and the Housing Construction Act.
Can the customer withhold payment in a construction project?
When you, as a contractor, fail to deliver the agreed product or necessary documentation on time, it will normally be considered a defect. In this case, your customer can - quite legally - withhold part of the payment to protect itself against costs resulting from error or defect. Even though this may be demanding for you, the law states that the client does not have to pay the full amount until everything is in accordance with the contract and requirements.
Who is right: The contractor or the client?
The simplest answer is that there is rarely an absolute answer: You need to consider the specific contract and the facts of the case. The client may be entitled to withhold payment if you are late in delivering the completed project, while you may be entitled to stop working or withhold documentation if the client withholds payment unlawfully.
In a case before Borgarting Court of Appeal (LB-2017-53899) of 2017, the contractor had arranged for a temporary use permit but failed to complete the entire project and apply for a completion certificate. The Court of Appeal ruled in favor of the client in withholding NOK 50,000 due to the lack of a completion certificate.
Here's how to manage such a situation:
- Have a clear overview: Make sure you know exactly what work needs to be completed and what documents are needed to apply for a temporary use permit or completion certificate. The better control you have, the easier it is to avoid misunderstandings and conflicts along the way.
- Send notifications in the event of non-payment: Set clear deadlines and make sure everything is documented in writing when you're considering stopping work or withholding your part of the completion documentation.
- Consider whether the consumer's withholding is justified: It's one thing for the consumer not to pay, but it's another thing if this is justified. Make a thorough assessment before stopping documentation work so that you don't unnecessarily incur liability for compensation and daily allowances.
- Document all circumstances: Regardless of whether you believe you have the law on your side, you should make sure you have documentation of all correspondence, notification letters and dialogue about any additional work, deadline extensions and any deficiencies. Writing always goes the furthest (SMS and email are also written).
Conclusion: This is how you manage a missing use permit and completion certificate
You have good rights under the Craftsman Services Act and the Housing Construction Act - you can withhold documentation in the event of non-payment. However, you must ensure that the customer's withholding of money is not justified before making such a decision.
According to section 46 of the Building Construction Act, the client can demand that the building is ready for legal use and that the necessary permits have been granted before he is obliged to pay the final settlement. Construction matters are rarely black and white - you always must look at the contract and the actual course of events to determine who is responsible.
By taking active steps early in the process, ensuring good routines for documentation and notification, and following up any delays thoroughly, you'll be in a much stronger position when the project moves towards a handover.
Our construction team can help assess your legal position. Get in touch for a no-obligation chat!
FACING ISSUES IN YOUR CONSTRUCTION PROJECT?
Our experienced construction law lawyers are here to help. Reach out today!
