Attorney Choi Ji-hyun from the law firm "Syu" assisted in facilitating the smooth resolution of disputes between Company F and the construction company through the preparation of a composition proposal for Company F.
Given the recent trends in the real estate market, disputes related to real estate are becoming more frequent. Among these, disputes between developers and construction companies are quite common. In this case, the developer demanded a construction suspension from the construction company due to accumulated disputes between them.
However, even if the construction were to be suspended, there were significant discrepancies between the parties regarding: 1) the progress payment, and 2) the amount that the developer had to settle with the construction company. Moreover, the involvement of subcontractors added to the deadlock in reaching an agreement between the parties.
Attorney Choi Ji-hyun narrowed the gap between the parties regarding the progress payment through the drafting and negotiation of a composition proposal, considering the legal risks associated with the construction suspension process.
Below are some key points to consider when drafting a composition proposal:
1. Determination of Progress Payment at the Time of Suspension
In this case, there was a lack of agreement between the parties regarding the progress payment at the time of suspension. Additionally, there was a need for settlement of subcontracting fees, material costs, service fees, and meal expenses that had not yet been accounted for. It is practically impossible to accurately determine the progress payment without an appraisal. Therefore, reaching an agreement within a reasonable range becomes inevitable, especially for relatively small projects where a composition is sought. Reference to similar cases can be helpful in this regard.
2. Settlement of Construction Fees
One of the most critical aspects of drafting a composition proposal is the "settlement of construction fees" based on the determined progress payment. In many cases, disputes arise after the composition is drafted because construction companies see it as merely a formality before transferring the project to another party, without considering the settlement of construction fees as a separate issue. Therefore, it is crucial to clearly define the rights and obligations of both parties regarding the settlement of construction fees by considering all related costs and payments made.
3. Liability for Defects
A common source of post-composition disputes is the allocation of responsibility for defects arising after the suspension of construction. The new construction company taking over from the suspended one may be liable for defects occurring before the suspension, while the developer may hold the new construction company accountable for defects arising after the suspension. To address this, it is essential to thoroughly assess the existing defects and explicitly specify the allocation of liability in the composition proposal.
In summary, resolving disputes between developers and construction companies through composition proposals requires careful consideration of various factors, including progress payments, settlement of construction fees, and liability for defects, to ensure a smooth and fair resolution without resorting to litigation.
Additionally, I recommend seeking agreements such as the Change of Contractor Consent Form and the Waiver of Construction Rights Agreement to mitigate potential legal risks in the future. The contents of these agreements should vary depending on each project and may need to be customized accordingly. If you are planning a composition, seeking the assistance of experienced professionals to prepare for future disputes is advisable.
Attorney Choi Ji-hyun from the law firm "Syu" assisted in facilitating the smooth resolution of disputes between Company F and the construction company through the preparation of a composition proposal for Company F.
Given the recent trends in the real estate market, disputes related to real estate are becoming more frequent. Among these, disputes between developers and construction companies are quite common. In this case, the developer demanded a construction suspension from the construction company due to accumulated disputes between them.
However, even if the construction were to be suspended, there were significant discrepancies between the parties regarding: 1) the progress payment, and 2) the amount that the developer had to settle with the construction company. Moreover, the involvement of subcontractors added to the deadlock in reaching an agreement between the parties.
Attorney Choi Ji-hyun narrowed the gap between the parties regarding the progress payment through the drafting and negotiation of a composition proposal, considering the legal risks associated with the construction suspension process.
Below are some key points to consider when drafting a composition proposal:
1. Determination of Progress Payment at the Time of Suspension
In this case, there was a lack of agreement between the parties regarding the progress payment at the time of suspension. Additionally, there was a need for settlement of subcontracting fees, material costs, service fees, and meal expenses that had not yet been accounted for. It is practically impossible to accurately determine the progress payment without an appraisal. Therefore, reaching an agreement within a reasonable range becomes inevitable, especially for relatively small projects where a composition is sought. Reference to similar cases can be helpful in this regard.
2. Settlement of Construction Fees
One of the most critical aspects of drafting a composition proposal is the "settlement of construction fees" based on the determined progress payment. In many cases, disputes arise after the composition is drafted because construction companies see it as merely a formality before transferring the project to another party, without considering the settlement of construction fees as a separate issue. Therefore, it is crucial to clearly define the rights and obligations of both parties regarding the settlement of construction fees by considering all related costs and payments made.
3. Liability for Defects
A common source of post-composition disputes is the allocation of responsibility for defects arising after the suspension of construction. The new construction company taking over from the suspended one may be liable for defects occurring before the suspension, while the developer may hold the new construction company accountable for defects arising after the suspension. To address this, it is essential to thoroughly assess the existing defects and explicitly specify the allocation of liability in the composition proposal.
In summary, resolving disputes between developers and construction companies through composition proposals requires careful consideration of various factors, including progress payments, settlement of construction fees, and liability for defects, to ensure a smooth and fair resolution without resorting to litigation.
Additionally, I recommend seeking agreements such as the Change of Contractor Consent Form and the Waiver of Construction Rights Agreement to mitigate potential legal risks in the future. The contents of these agreements should vary depending on each project and may need to be customized accordingly. If you are planning a composition, seeking the assistance of experienced professionals to prepare for future disputes is advisable.