The Woningborg scheme: an introduction
In the Netherlands, there are three major providers of guarantee and warranty schemes: Woningborg, SWK and Bouwgarant. However, awareness of these schemes is limited amongst both contractors and consumers. That is why we are launching this series on the most widely used warranty scheme, Woningborg, featuring practical tips drawn from real-world experience for both consumers and contractors.
What do the guarantee and warranty schemes cover?
Every consumer’s worst nightmare is that the contractor goes bankrupt during the construction phase and the build comes to a standstill. In such a case, consumers face enormous costs; not only do they have to pay double bills for a period, but they also have to find a new contractor to continue the build based on the current state of the work and to rectify any defects, for example resulting from water ingress caused by the work coming to a standstill. Experience shows that the additional costs in such cases can range between 15 and 25 per cent, although deviations from this are not uncommon.
What does the completion guarantee entail?
The most important form of protection provided by the guarantee and warranty schemes is therefore likely to be the completion guarantee. If construction comes to a standstill as a result of the contractor’s bankruptcy, the guaranteeing body will seek a new party to oversee the completion of the work. In such cases, Woningborg, SGK or Bouwgarant will also cover the additional costs. In effect, as a consumer, you are purchasing a guarantee that your home will be completed without any financial setbacks. As a consumer, you should also pay close attention, as compensation is sometimes capped, for example at a percentage of the contract price.
Woningborg is the market leader in the field of guarantee and warranty schemes, with a share of approximately 70 per cent of all project-based new-builds in the Netherlands.
How does the repair guarantee work?
In practice, the completion guarantee is rarely invoked. The repair guarantee is much more common and has far more far-reaching consequences for contractors. Contractors must provide a guarantee for parts of the completed building and must rectify defects during the guarantee period. This obligation to rectify goes beyond the statutory obligation to repair. However, there is also an insurance element for the consumer here, because even if the contractor goes into liquidation after completion, Woningborg will arrange for a new contractor to carry out the repairs and will cover the costs.
Does Woningborg offer any further legal advantages through its model contracts?
In addition to the usual benefits of Woningborg, the organisation also imposes strict conditions on the legal drafting of contracts. These contracts contain special provisions that are favourable to the consumer. The downside is that contractors sometimes find themselves in a difficult position. Any deviation from these agreements must not be to the detriment of the consumer, on pain of nullity. In practice, we even see examples of errors in the project caused by the property developer, which are then blamed on the contractor.
What conditions must you meet to make a claim under the Woningborg schemes?
To make a claim under the terms of the Woningborg guarantees, the consumer must meet the relevant conditions. As this is an insurance policy, the premium must be paid to Woningborg (via the contractor) and the consumer must be in possession of the certificate. There are pitfalls here too, because if the consumer does not possess the physical certificate, they cannot claim under the guarantee. This sometimes leads to problems, for example when a contractor has charged for this but fails to provide the certificate.
The completion guarantee and the repair guarantee in practice
In practice, things also regularly go wrong for consumers because they do not act in accordance with the terms and conditions of Woningborg or another organisation. A distressing case occurred some time ago, in which the builder went bankrupt. The consumer took the initiative to complete the build themselves and subsequently submitted the receipts from the (new) contractor to Woningborg. By doing so, the consumer no longer met the conditions of the completion guarantee. Under the scheme, Woningborg is responsible for having the property completed and therefore commissions one or more contractors to carry out the work. As the consumer had arranged this themselves without involving Woningborg, we were unable to assist him further and he received no compensation. This painful example makes it clear that both contractors and consumers are best advised to seek legal assistance, even where guarantee schemes apply.
Questions
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