Clause 14 of the construction contract was three lines long. Most people skip it.
It set two things. The first: five percent is withheld from each payment to the contractor, released only at the end. The second: if there is no progress in the works for sixty days, the developer may remove the contractor from the site and bring in another one.
Michal signed that contract without being especially enthusiastic about the clause. The contractor was recommended, the price was reasonable, and she had built a good relationship with him. “I don't intend to use it,” she told me at the time. “But it's good that it's there.”
A year and a half later, in the middle of building a residential project on the outskirts of Bucharest, she called and said something was wrong at the site.
It didn't happen in a day. First fewer workers arrived. Then trucks with raw materials came only once a week. The site manager began explaining that materials were missing, that there was a problem with a supplier, that next week it would sort itself out. Next week it didn't sort itself out.
Michal watched it happen and didn't want to believe it. She knows these moments in projects. Sometimes a contractor gets stuck with cash flow for a few weeks and comes out of it. Sometimes a supplier really is late. A developer who jumps at every slowdown quickly finds himself without contractors willing to work with him. So she waited, and asked, and received explanations. But she also began doing something that in hindsight mattered no less: photographing the site every few days, and recording how many workers were there and what was done.
Then the work stopped.
Here Michal did the first thing that was right: she didn't wait. She didn't call the contractor to ask how he was. On the day the work stopped, a written notice went out to him, documenting the state of the site and referring to the clause in the contract.
And from that day the count began.
The mistake I see most among developers with such a clause is treating the sixty days as waiting time. They wait to see whether the contractor will return, and only on day sixty do they start thinking about what to do. Then on day sixty-one they discover there is no alternative contractor, that nobody is willing to enter the site on a week's notice, and that the clause that gave them the right to remove the contractor gave them nothing to put in his place.
Michal used the sixty days as preparation time. While the notice did its work, she was already talking with other contractors. And before day sixty a second notice went out: notice of the intention to remove the contractor from the site. When such a notice arrives with the name of a replacement who is already in talks, it doesn't sound like a threat. It sounds like what it is, a decision.
The contractor did not return. Michal replaced him.
I'd like to say that was the happy ending, and to a large extent it was. But the replacement cost money, and not only money.
The project was delayed by two months. Handovers to buyers were late, with everything that entails with them. Michal sat down and wrote to each buyer individually, explaining what had happened and what the new schedule was. Some understood. Some less so. None of them bought an apartment to hear about a building contractor they had never met. And the new contractor set a condition Michal hadn't anticipated: he was unwilling to take responsibility for the previous contractor's work. What was built before him stayed the responsibility of someone else. And since that someone else was no longer in the picture, in practice it stayed with Michal.
Think about what that means. A new contractor entering the middle of a building has to build on foundations and a structure he did not pour. If in two years a crack or dampness appears, he will say it is from the stage before him, and he has no reason to think otherwise. He priced that in, and asked for a higher price than Michal had paid the previous one. So Michal paid more for everything that remained, and in addition was left with the risk on everything already built.
The five percent that was withheld did not cover all of this. But it was money that stayed in her hands and not in the hands of a contractor who had left the site. And that is a difference you feel on the day you have to pay someone new.
“I told you I didn't intend to use that clause,” she said to me in our last conversation. “It's good I didn't listen to myself.”
What stays with me from this story is not the clause itself. The clause is three lines. What made the difference is that Michal began counting from the first day, and not from the last.
The question I would ask in your place
- If my contractor stops tomorrow, which clause in the contract lets me act, and within how long?
- What sum remains with me, and not with the contractor, on the day I need to bring someone else in?
- Who will take responsibility for what has already been built, if whoever built it is no longer in the picture?
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית