IS COMPENSATION REQUIRED IN CASE OF BUILDING A HOUSE CAUSING DAMAGE TO THE NEXT HOUSE?

IS COMPENSATION REQUIRED IN CASE OF BUILDING A HOUSE CAUSING DAMAGE TO THE NEXT HOUSE?
Posted date: 05/04/2021

My neighbor built a house, which made my house cracked, partially sunk, and broken tiles. I have repeatedly complained and asked for damages but they did not cooperate. I would like the FDVN Lawyer to advise on the builder's obligations as well as their responsibilities if they cause damage to my home.

FDVN’s opinions:

Thank you for concerning FDVN’s legal services. Regarding your consulting requests, after studying the relevant legal documents, FDVN Law Firm would like to give you the following advice:

 

1. Legal provisions on the liability to compensate for damage when the construction affects the adjacent work

(i). Article 174 of the Civil Code 2015 has provisions on the obligation to respect building regulations as follows:“When constructing a project, the owners and holders of other property-related rights must comply with the law on construction, ensure safety. It may not build beyond the height and distance specified by the law on construction and infringes the legitimate rights and interests of owners of adjoining and surrounding immovable properties”

 (ii). Article 605 of the Civil Code 2015 provides compensation for damage caused by houses and other construction works or buildings, specifically:

 “An owner or a possessor of a house or another construction work, or a person to which the owner has assigned the management or use thereof, must compensate for damage if such house or construction causes damage to another person.

If the executor of the house or construction work is partly at fault that such house or construction work causes damage, he/she must jointly compensate for such damage”.

People having liability for compensation include the owner/possessor/a person to which the owner has assigned the management of a house or another construction. In case of damage arising during construction, the executor at fault shall have to jointly compensate.

(iii). Pursuant to Clause 2, Article 8 of Circular No. 05/2015/TT-BXD, the management of construction quality and maintenance of detached houses are specified as follows:

“1. Before the construction, the owner shall initiatively greet the owners or the managers/users of adjacent and neighboring works for checking the current conditions and take note of the defects (if any) of the adjacent/neighboring works. The owners or the managers/users of adjacent and neighboring works shall cooperate with such owners in checking and recording the current conditions of their houses as the basis for the solution of any disputes arising.

2. During the construction process, if an adjacent/neighboring work denotes subsidence, crack, absorption, leakage or is likely to collapse due to such construction, the owner of the house shall contact the owner/manager/user of such adjacent/neighboring work for inspecting to determine the causes and to negotiate remedial measures. If the parties cannot negotiate an agreement, the arising dispute shall be solved according to law provisions”.

Therefore, the owner of the construction work has liability for associating with the owner/manager/user of such adjacent work for inspecting to determine the causes and negotiate remedial measures when the adjacent work is affected by construction, shows signs of subsidence, crack, absorption, leakage or in danger of collapse.

(iv). Grounds giving rise to liability to compensate for damage are specified in Article 584 of the Civil Code 2015 as follows:

  • A person intentionally or unintentionally harming the property of a person must compensate for such damage.
  • The person who causes damage shall be discharged from liability for compensation in a case where the damage incurs due to force majeure events or at entire fault of the aggrieved person unless otherwise agreed or otherwise prescribed by law.

 

2. Principles of compensation for damage (Article 585 of the Civil Code 2015)

  • Actual damage must be compensated in full and promptly. Unless otherwise provided by law parties may agree on the amount of compensation; in the form of compensation, which may be money, in-kind or the performance of an act; lump-sum payment or payment in installments; and on the method of compensation.
  • The compensation payable by a person having caused damage may be reduced if such damage was caused unintentionally and is very large in comparison to the financial positions of such person.
  • If the amount of compensation determined becomes unrealistic, the aggrieved person, or the person having caused damage, has the right to request a court or another competent authority to change the amount of compensation.
  • If the aggrieved party is partly his/her fault for causing the damage, that part of the damage shall not be compensated.
  • The party having rights and interests infringed shall not be compensated if such damage incurs due to his/her failure to adopt necessary to prevent the damage.

Therefore, first of all, on level of compensation, on the form of compensation shall be agreed by the parties. In case the parties are not able to agree, they are entitled to request a Court for settlement.

 

3. The way to determine the damage caused by the infringed property (Article 589 of the Civil Code 2015)

In the event of an infringement of property, the compensation damage shall comprise:

  1. Property that was lost, destroyed, or damaged.
  2. Interest associated with the use and exploitation of the property was lost or declined.
  3. Reasonable costs for the prevention, mitigation, and remedy of the damage.
  4. Other damage as prescribed by law.

 

4. Handling in the case where the owner of the work causing damage fails to cooperate for settlement

(i) To be administratively sanctioned under Clause 3, Article 15 of Decree No. 139/2017/ND-CP:

The following penalties shall be imposed for executing the construction works inconsistently with regulations on quality management of construction works causing subsidence, crack or damage to technical infrastructure facilities or adjacent works (if relevant parties fail to reach an amicable agreement on compensation for damage in accordance with the civil law), or causing collapse or risk of collapse to adjacent works without causing harm to human health or life:

a) A fine ranging from VND 3,000,000 to VND 5,000,000 shall be imposed for construction of a single-detached house in a rural area or execution of a construction work other than the cases prescribed in Point b and Point c of this Clause;

b) A fine ranging from VND 15,000,000 to VND 20,000,000 shall be imposed for the construction of a single-detached house in an urban area;

c) A fine ranging from VND 20,000,000 to VND 30,000,000 shall be imposed for the construction of the work requiring the formulation of an economic – technical report or construction project.

(ii) Restore everything to its original state to compensate for the damage

Article 3 of Circular 03/2018 / TT-BXD dated April 24, 2018, specifies this issue as follows:

- The compensation for damage will be paid under the agreement between the investor and the aggrieved party. In case the parties fail to reach an amicable settlement, the compensation for damage shall be paid in accordance with provisions of the Civil Code.

- If an adjoining building has collapsed or is facing collapse, the investor is obliged to suspend the execution and immediately implement measures for moving people and assets in such adjoining buildings to safer places. The investor is obliged to provide leased houses for the aggrieved parties and pay rental thereof. Leased houses must be convenient for traveling with the appropriate area and ensured social infrastructure so that the aggrieved parties may stably live. If an aggrieved party self-rents a house (whose facilities are similar to his injured apartment), the investor is obliged to make payment for house rental and relocation costs to such an aggrieved party.

- If the investor and the aggrieved party fails to reach an amicable settlement and the case is submitted by either party to the Communal People’s Committee for settlement after the administrative violation has been officially recorded, such case will be settled as follows:

  1. Within a maximum period of 05 working days from the receipt of the written complaint, the Chairperson of the Communal People’s Committee shall conduct conciliation;
  2. Over the permitted period of 07 working days from the date on which the conciliation is unsuccessful or failed by default of a party, the Chairperson of the Communal People’s Committee shall conduct a pre-conciliation;
  3.  If either party is absent from the pre-conciliation without giving legitimate reasons, the Chairperson of the Communal People’s Committee shall decide to hire a qualified consultant with legal status to determine the amount of compensation for damage. The investor shall cover the costs of hiring a consultant. After the amount of compensation has been determined, the Chairperson of the Communal People’s Committee shall request the investor to transfer such amount of money to the escrow account owned by the Communal People’s Committee. The investor shall continue executing the construction works only when the full amount of compensation as determined has been transferred to the prescribed escrow account;
  4. If two parties fail to reach an agreement on the amount of compensation for damage, they shall agree to hire a qualified consultant with legal status to determine the amount of compensation as prescribed. In case two parties fail to reach an agreement on the selection of a consultant or disagree on the amount of compensation calculated by the consultant, the Chairperson of the Communal People’s Committee shall hire another consultant to determine the amount of compensation for damage. The investor shall cover the costs of hiring a consultant. Based on the results provided by the hired consultant, the Chairperson of the Communal People’s Committee shall request the investor to transfer the determined amount of compensation to the escrow account owned by the Communal People’s Committee. The investor shall continue executing the construction works only when the full amount of compensation as determined has been transferred to the prescribed escrow account;
  5.  Either party has the right to take the other to the Court if disagreeing on the determined amount of compensation for damage.
  • The investor that is not liable to an administrative penalty is encouraged to pay compensation for damage as above provisions.
  • The violating entity shall continue executing the construction works only when the parties have reached an agreement and completed payment of compensation for damage or fully complied with procedures for settling the case specified as above provisions.

(iii) Dispute settlement at the competent Court

You can file a lawsuit asking the competent People's Court to resolve it. The level of compensation must be based on the actual damage caused by the owner, the costs to repair the work ... Besides, in order to have a basis for settlement, the damage to the work is determined based on the results examined and assessed by the Valuation Council. According to Article 102 of the Civil Procedure Code 2015:

“1. Involved parties may petition Courts to request expertise or request expertise themselves if the involved parties’ applications for referenda for expertise have been rejected by the Courts. The right to apply for expertise shall be exercised before the Courts issued decisions to bring the cases to trial according to first-instance procedures or decisions to hold the meetings for resolving civil matters.

2. At the request of involved parties of when it is deemed necessary, Judges shall decide to conduct referenda for expertise. In decisions to request expertise, names and addresses of expert-witnesses, objects of expertise, expertise matters and requests that need conclusions of expert-witnesses must be specified”.

To resolve this dispute, the parties can agree with each other on the level of compensation and the form of compensation. In case it is not possible to agree on the compensation level before being brought to the State agencies for settlement, the parties may agree to hire an organization with the function of assessing and evaluating the current property status as a basis for determining adequate compensation.

In case the parties cannot reach an agreement, the case can be brought to the People's Committee of the commune or initiated a civil case at a competent People's Court for resolution according to the legal provisions cited above.

In addition, you need to record the current state of damaged property (photographing, video recording, making a license ...) to collect evidence in case the incident must be resolved by the State agencies.

Above is the advisory opinion of FDVN related to your consulting request on the basis of researching legal regulations. Hopefully, the advice of FDVN will be useful to you.

Ngo Thi My Tram – FDVN Law Firm


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