Contractor liability for unlawful construction
When building a house, a swimming pool or carrying out other construction works, investors rely on the expertise of designers and contractors, expecting all works to be performed lawfully and in accordance with professional standards. Problems arise, however, when it is discovered after completion that the structure does not comply with the spatial plan, the building permit or other regulations. The owner may then face substantial costs of rectification, an obligation to remove unlawfully executed works, or a reduction in the value of the property.
In such situations, contractors frequently argue that they carried out the works in accordance with the supplied design and the investor’s instructions. However, following the design does not, in itself, relieve the contractor of liability.
Under the Croatian Building Act, a contractor must carry out construction in compliance with the building permit, applicable regulations and professional standards. The Croatian Obligations Act further requires the contractor to warn the client of defects in the client’s instructions and other circumstances which the contractor knew or ought to have known about and which are relevant to the performance of the works.
For example, an investor commissions the construction of a swimming pool based on a design that does not comply with the applicable spatial plan. The contractor carries out the works exactly as designed, but it subsequently emerges that the pool could not lawfully have been built in the proposed manner. If the contractor, as a professional, could and should have recognised the irregularity but failed to warn the investor, the contractor may be liable for the resulting damage.
This position is also supported by case law. In judgment Gž-2863/2022-2 of 14 February 2023, the County Court in Zagreb examined a contractor’s liability for defects in waterproofing. The court rejected the contractor’s argument that the works had been carried out in accordance with the investor’s requirements, stressing that this did not exclude liability, particularly where the contractor had failed to prove that it had previously warned of the risk of damage.
In judgment Gž-5617/2024-4 of 24 March 2026, the County Court in Zagreb further emphasised that a contractor, as a professional, must warn the investor in good time of any legal obstacles to construction, including the need to obtain the relevant permits.
On the other hand, a contractor is not expected to identify every design error. As the Commercial Court in Zagreb stated in judgment P-1536/2024-8 of 29 November 2024, a contractor must identify design defects that an ordinarily competent contractor would be able to detect and notify both the investor and the supervising engineer. For certain defects relating to the essential requirements for a building, the contractor may be liable even where their cause originates in the design.
Nor does the fact that an investor insists on certain works despite being warned mean that those works may be carried out in breach of mandatory provisions. Such a warning may affect the contractor’s civil liability, but it cannot make unlawful construction lawful.
If damage results from improperly or unlawfully executed works, the investor may, depending on the circumstances, claim compensation for the necessary costs of rectification, a reduction in the value of the property or other provable damage.
Responsibility for the lawfulness of construction does not rest solely with the investor and the designer. Contractors have their own statutory duties and may be liable for the consequences of irregularities which, exercising the care expected of a competent professional, they could and should have recognised. Merely following the design is not sufficient to relieve a contractor of liability.
