The house burned down before turnover — who absorbs the loss if the contractor supplied the materials?

Materials decide who carries the risk

Article 1717 provides that If the contractor bound himself to furnish the material, he shall suffer the loss if the work should be destroyed before its delivery, save when there has been delay in receiving it. The rule follows the ordinary logic of ownership: a contractor who supplied the materials owns what he has built until he turns it over, so he bears its destruction. Progress payments already made do not change that, and neither does the fact that the structure stands on the owner's land. The first question in any of these disputes is therefore what the contract said about who supplies materials.

The exception is delay in receiving

The saving clause protects a contractor who was ready to turn the work over and could not. Where the owner was called to accept and did not, or withheld the inspection or the act needed to complete turnover, the loss no longer falls on the contractor. That is why the notice of completion, the invitation to inspect and the record of a scheduled turnover that did not happen matter so much after a fire. Article 1721 works alongside this: where an act of the employer is required in the execution of the work and he delays or fails to perform it, the contractor is entitled to reasonable compensation.

Where the contractor supplied only labour

The opposite arrangement is covered by Article 1718. A contractor who undertook to put in only his work or skill cannot claim any compensation if the work is destroyed before delivery, unless there was delay in receiving it, or the destruction was caused by the poor quality of the material, provided that fact was communicated in due time to the owner. So a labour-only builder loses his pay rather than the value of the house, and he keeps it if he had warned the owner in time that the materials the owner supplied were not good enough. That warning has to be on record.

What to establish after a fire

Fix three things in order: who was bound to furnish the materials, whether delivery had occurred, and whether anyone was in delay. The contract and the bill of quantities answer the first. Turnover certificates, punch lists, occupancy and the handing over of keys speak to the second. Correspondence about scheduling the acceptance speaks to the third. Then look at Article 1720, under which the price is paid at the time and place of delivery of the work unless otherwise stipulated, with partial deliveries paid as they are made where a price for each part was fixed.

Related provisions

• Civil Code, Article 1717 — Loss Where Contractor Furnished Materials
• Civil Code, Article 1718 — Loss Where Contractor Furnished Only Labor
• Civil Code, Article 1720 — Payment of the Price
• Civil Code, Article 1721 — Employer's Delay