Notice of the Ministry of housing and urban rural development and the Ministry of Finance on printing and distributing the management measures for construction project quality deposit (JZ [2017] No
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138) relevant departments of the CPC Central Committee, ministries and commissions of the State Council, institutions directly under the State Council, high court, Supreme People’s Procuratorate, relevant people’s organizations, central management enterprises, housing and urban rural development departments (Construction Commission, Construction Bureau) and finance departments of all provinces, autonomous regions, municipalities directly under the central government and cities under separate state planning（ Construction Bureau and Finance Bureau of Xinjiang production and Construction Corps: in order to implement the spirit of the State Council on further clearing up and standardizing enterprise related fees, effectively reducing the burden of construction enterprises, and standardizing the management of construction project quality deposit, the Ministry of housing and urban rural development and the Ministry of finance have revised the measures for the management of construction project quality deposit (JZ [2016] No
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295)
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It is now printed and distributed to you
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Please implement it carefully according to the actual situation of our region and department
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Ministry of housing and urban rural development of the people’s Republic of China Ministry of finance of the people’s Republic of China June 20, 2017 (this initiative is open) Article 1 in order to standardize the management of construction project quality deposit and implement the maintenance responsibility of the project during the defect liability period, according to the “construction law of the people’s Republic of China”, “Regulations on construction project quality management” and “State Administration Regulations”, the Ministry of housing and urban rural development of the people’s Republic of China has issued the following measures: The measures are formulated in accordance with the notice of the general office of the people’s Republic of China on clearing and standardizing the deposit in the field of engineering construction and the financial management rules for capital construction
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Article 2 the construction project quality deposit referred to in these measures (hereinafter referred to as the deposit) refers to the fund reserved from the project funds payable as agreed by the employer and the contractor in the construction project contract, so as to ensure the contractor to repair the defects of the construction project during the defects liability period
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Defect refers to the quality of the construction project does not meet the mandatory standards of engineering construction, design documents, as well as the contract agreement
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The defects liability period is generally one year, and the longest is not more than two years, which shall be agreed by both parties in the contract
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Article 3 the employer shall specify the reservation and return of the security deposit in the bidding documents, and agree with the contractor on the following matters concerning the security deposit in the contract terms: (1) the reservation and return method of the security deposit; (2) the reservation proportion and time limit of the security deposit; (3) whether the security deposit is calculated and paid with interest, such as the calculation method of interest; and (4) defects The time limit and calculation method of the liability period; (5) the procedures for handling disputes over the reservation and return of the deposit and the quality and cost of project maintenance; (6) the claim method for defects in the defect liability period; (7) the payment method of liquidated damages for overdue return of the deposit and the liability for breach of contract
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Article 4 during the defects liability period, for government investment projects that are paid by the state treasury in a centralized way, the management of the deposit shall be carried out in accordance with the relevant provisions of the state treasury in a centralized way
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For other government investment projects, the deposit can be reserved in the financial department or the employer
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During the defects liability period, if the employer is cancelled, the deposit shall be transferred to the user for management together with the delivered assets, and the user shall perform the employer’s responsibilities on behalf of the employer
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If the social investment project adopts the form of reserved margin, the developer and the contractor may agree that the margin shall be entrusted by a third party financial institution
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Article 5 to implement the system of bank guarantee, the contractor may replace the reserved deposit with bank guarantee
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Article 6 if the performance bond has been paid before the completion of the project, the employer shall not reserve the project quality bond at the same time
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If other guarantee methods such as project quality assurance guarantee and project quality insurance are adopted, the employer shall not reserve any more deposit
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Article 7 the employer shall reserve the security deposit in accordance with the contract, and the total reserved proportion of the security deposit shall not be higher than 3% of the total settlement amount of the project price
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If it is stipulated in the contract that the Contractor shall replace the reserved deposit with a bank guarantee, the amount of the guarantee shall not be higher than 3% of the total settlement amount of the project price
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Article 8 the defects liability period shall start from the date when the project passes the completion acceptance
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If the completion acceptance of the project cannot be carried out within the specified period due to the Contractor’s reasons, the defects liability period shall be calculated from the date when the project actually passes the completion acceptance
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If the project cannot be completed and accepted within the specified time limit due to the employer’s reasons, the project will automatically enter into the defects liability period 90 days after the Contractor submits the completion and acceptance report
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Article 9 during the defects liability period, the Contractor shall be responsible for the maintenance of the defects caused by the contractor, and bear the cost of identification and maintenance
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If the Contractor does not repair or bear the cost, the employer can deduct it from the deposit or bank guarantee according to the contract
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If the cost exceeds the guaranteed amount, the employer can claim against the contractor according to the contract
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The Contractor shall not be exempted from the liability of compensation for the loss of the project after maintenance and bearing the corresponding expenses
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For defects caused by others, the employer shall be responsible for the maintenance, the Contractor shall not bear the cost, and the employer shall not deduct the cost from the deposit
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Article 10 during the defects liability period, the Contractor shall conscientiously perform the responsibilities stipulated in the contract, and upon expiration, the Contractor shall apply to the employer for refund of the deposit
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Article 11 after receiving the Contractor’s application for refund of deposit, the employer shall verify with the contractor in accordance with the contract within 14 days
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If there is no objection, the employer shall return the deposit to the Contractor as agreed
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If there is no agreement on the return period or the agreement is not clear, the employer shall return the deposit to the Contractor within 14 days after verification
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If the deposit is not returned within the time limit, the employer shall be liable for breach of contract according to law
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If the employer fails to reply within 14 days after receiving the Contractor’s application for return of deposit, and still fails to reply within 14 days after being urged, it shall be deemed as approving the Contractor’s application for return of deposit
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Article 12 in case of any dispute between the employer and the contractor over the reservation and return of the deposit, as well as the quality and cost of project maintenance, it shall be handled in accordance with the dispute and dispute resolution procedures stipulated in the contract
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Article 13 Where a construction project is subject to a general contract, the agreement on the rights and obligations of the general contractor and the subcontractor with respect to the deposit shall be implemented with reference to the agreement on the corresponding rights and obligations of the employer and the contractor in these measures
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Article 14 the Ministry of housing and urban rural development and the Ministry of Finance shall be responsible for the interpretation of these measures
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Article 15 these Measures shall come into force on July 1, 2017, and the original measures for the administration of construction project quality deposit (JZ [2016] No
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295) shall be repealed at the same time
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Related reading: Civil Code of the people’s Republic of China (excerpt – contract edition) [industry nation building] Construction Law of the people’s Republic of China [2019] [industry nation building (construction)] construction project quality management regulations [2019] [industry nation building (construction)] construction project safety production management Regulations [2004] notice of the Supreme People’s Court on trial of construction project construction contract Explanation of legal issues applicable to the same dispute cases (1) welcome to pay attention to, share, like and collect
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Yang Tao’s lawyer’s practice license No.: 14401201910118223 master’s degree, member of China law society, director of Gansu chamber of Commerce in Guangdong Province, member of the “one belt and one road” lawyer alliance
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He successively worked in Beijing Guantao Zhongmao (Guangzhou) law firm, Guangdong Guanghong Holding Co., Ltd., Guangdong Nanguo Desai law firm and other units, and served as deputy director of legal affairs and securities affairs of listed state-owned enterprise Guangdong Guanghong Holding Co., Ltd
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during 2017
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He is a full time lawyer with Chinese mainland lawyer practice license, qualification through securities and private equity fund qualification, and is familiar with civil litigation business, securities, private placement, enterprise compliance management and other professional legal matters.
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