Last edited 23 Mar 2018

Partial possession of the site by the client

As construction nears completion, there can be considerable pressure to allow the client or tenants to take possession of part of a building or site, even if the works are ongoing or there are defects that have not been rectified.

This can be programmed as part of the works through a requirement for sectional completion, but in the absence of such a provision many contracts offer the more open-ended option of partial possession.

The effect of partial possession is that:

The contractor is not obliged to allow partial possession (although permission cannot be unreasonably withheld), and may not wish to if, for example, access routes are difficult to achieve, it would disrupt the works, or it would incur additional costs. There could also be additional difficulties if the occupants of the part that has been possessed disrupt the contractor, which could result in a claim for extension of time and/or loss and expense.

An alternative arrangement might be for the client to 'use or occupy' the works. This is different from possession in that the client does not have sole use of the works, and the contractor remains in possession, with responsibility for insurance, and so on.

For more information, see Early use.

Partial possession requires particular consideration of:

NB: The New Engineering Contract (NEC) offers a different description of partial possession as 'taking over' the works.

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Comments

If partial possession occoured in a project,can the contractor handling the project apply for completion certificate and the format to use for such application?


As always - it depends on what the contract says. However, in general terms, practical completion should be certified for the part of the works that the client takes possession of. This would be the same process that would apply for certifying practical completion of the whole works at the end of the construction period - but making clear which parts of the works it applies to.


Q: If there is a performance bond in place, which would normally terminate on PC, does the Bond value also decrease in the same way Liquidated damages would decrease on a pro rata basis?

A: I have never heard of a bond diminishing in value as the project proceeds nor is it normal for the bonds to cease at PC. However bonds are usually set at 10% of contract value and the claimant will need to demonstrate that its costs as a result of the contractor’s default or insolvency are of the value of the bond or more. It is usual for bonds which in effect are a guarantee to terminate at the end of the defects liability period on the issue of a final certificate.

See: Bond and Performance bond for construction.


Q: If Partial Posession is unavoidable, when does the CMGD comes to effect? Can there be multiple CMGD in a project?

A: There would have to be multiple certificates of making good defects.


Q: If the principle contractors client is providing a number of shops within a shop to a white box finish for various brands to then employ their own shopfitters to design and fit them out do the brands contractors then take over the responsibility of Principle contractor within their own area's

A: Generally the role of principal contractor is one of co-ordinating contractors where there is more than one - so the responsibility would not usually be taken over by individual contractors - unless they could be seen as entirely separate projects. What does it say in the contract? If you are still not clear, it would be best to seek legal advice.

Q: Our contract is with the brand direct and not with the principle contractor or his client, we take instructions and are paid directly from the brand.


Q: Can the employer take partial possession after the original completion date? (with no extension of time?) The contract doesn't allow sectional completion, a certificate of non completion has been issued, the majority of works are complete and ready for clients' possession, but contractor needs access to part of the site to finish external works. Does the notice of partial possession needs then to be issued at the same time as another certificate of non completion for the outstanding part?

A: As ever, it depends what it says in the contract, and if in doubt seek legal advice, but there would seem to be no reason that you cannot take partial possession of part of the site even though a certificate of non-completion has been issued for the whole site. The complexities are that retention would have to be released for that part of the site, liquidated damages would be reduced, the defects liability period would be begin for that part etc.