Mandatory documents
When carrying out structural construction, reconstruction, repair, renovation (modernization), demolition or maintenance construction works of a cultural heritage structure, they must be insured with compulsory construction work and civil liability insurance.
The object of this insurance is the construction works carried out by the contractor, the construction products delivered to the place of the insured object. Also, the contractor’s civil liability for damage caused to third parties and to the builder’s (customer’s) property, which is not considered the result of construction work.
When carrying out construction works according to the signed contracts, the insurance covers the works carried out by subcontractors chosen by the contractor and their civil liability. When the construction is carried out in an economic manner, the civil liability of the builder (customer) for damage to third parties is prohibited.
The Construction Inspectorate reminds that the performance of activities without an insurance contract, when it is mandatory, is considered the performance of activities without the right to engage in this activity.
The contractor, together with the act of handing over the construction works performed by the contractor to the builder (customer), must submit a document that ensures the fulfillment of the obligations of the warranty period according to the signed contract.
The document that ensures the fulfillment of the obligations of the warranty period according to the signed contract must also be submitted when you want to receive the act of completion of the construction or the confirmation of the declaration on the completion of the construction.
The document ensuring the fulfillment of the obligations of the warranty period protects the buyers of real estate (NT) from damages that become apparent later, even if the developer is already bankrupt. Unfortunately, cases where unscrupulous developers forge these documents are becoming more frequent.
When the building inspectorate contacted the insurer specified in the insurance contract – BTA insurance – the facts were confirmed that the copies of documents uploaded to IS “Infostatyba” do not correspond to the content of the original documents available to BTA.
Protects both the real estate developer and the buyer
In the event of the contractor’s insolvency or bankruptcy, the Guarantee document must ensure payment of the costs of removing defects caused by the contractors’ fault, identified during the first 3 years of the building’s warranty period, to the builder or the customer. The amount of guarantee for the elimination of defects must be at least 5 percent of the construction price of the structure.
“The beneficiary – in this case, the home buyer – can apply to the insurance with a claim that the contractor, a client of that insurance company, does not repair the defects during the warranty period or is bankrupt. We conduct an investigation after considering the validity of the claim and the demand. If the claim is justified, we pay out the payment. If the policyholder is alive and not bankrupt, the insurance company seeks to recover the payment from him to the home buyer by way of recourse,” explains Robert Švarcas, Claims Investigation Department of Compensa Vienna Insurance Group, which provides fraud prevention services to the insurance companies BTA and Compensa, explaining the benefits provided by the guarantee document manager.
“If the builder or contractor goes bankrupt and there is no guaranty bond document, the owner of the house will have to be compensated for the damage caused due to possibly improperly performed construction work,” adds Saulius Puidokas, adviser of the Construction Inspectorate on corruption prevention.
“Guarantee insurance, which also includes a letter of assurance of the obligations of the warranty period, is a complex type of insurance. Only knowledgeable sellers, brokers or agents can enter into such contracts. It is impossible to make them online due to the high probability of errors – often clients simply do not know the specific conditions that must be included in the surety policy”, says R. Švarcas.
Therefore, there are no opportunities to conclude these contracts online. They are written only with the help of insurance company representatives, and digitized copies of documents are uploaded to IS “Infostatyba”.
There is a threat of serious trouble
For forging documents, the company and specific persons who forged the document are subject to criminal liability. Paragraph 1 of Article 300 of the Criminal Code of the Republic of Lithuania provides that persons (both natural and legal entities) who produced a fake document, forged a real document or kept, transported, sent, used or realized a known fake or known forged real document are liable to a fine or arrest , or imprisonment for up to three years.
“Despite the fact that we have recorded many similar cases, unfortunately, more and more builders start to cheat and try to save money, submitting forged documents to IS “Infostatyba”. It is important to mention that such frauds can have extremely painful consequences. In the event of an accident, the damage caused by the actions of such builders may have to be compensated for by the home owners themselves,” says S. Puidokas.
The Construction Inspectorate emphasizes its commitment to fight against any illegal activity in the construction sector, including forgery of insurance documents, fraud or any other violations. In order to ensure harmonious construction processes and prevent possible cases of abuse, the legality of various construction-related documents is constantly checked by the Construction Inspectorate. If any possible illegal acts are detected, the information is passed on to the law enforcement authorities.
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