Transfer of ownership of property
(Правовое руководство по составлению строительных контрактов)
The issue of whether various types of property involved in the construction of an industrial works are owned by the contractor or the purchaser may be important in connection with questions of insurance, taxation, and liability to third persons arising from the property or its use. The issue is also important because the property may be seized by creditors of its owner and is subject to bankruptcy proceedings against him (paragraph 1). This Guide deals with the transfer of the ownership of property as an issue distinct from the passing of risk of loss of or damage to that property (paragraph 2).
The transfer of ownership of equipment and materials which are to be incorporated in the works is often governed by mandatory rules of the legal system where the property is situated (paragraph 3). Many legal systems contain a mandatory rule that all things affixed to land become subject to the ownership of the landowner (paragraph 4). Even if the applicable law permits the parties to regulate through contract provisions the transfer of ownership of property from one party to the other, they may need to include such provisions only where the applicable law does not regulate the transfer in a satisfactory manner (paragraph 5). Contractual provisions allocating the ownership of equipment and materials to the party who does not own the works may cease to have effect upon the incorporation of the equipment materials in the works (paragraph 6).
In regard to the transfer of ownership of equipment and materials supplied by the contractor, it may be desirable that ownership does not remain with him after the purchaser has paid a substantial portion of the price for them. In regard to the transfer of equipment and materials supplied by the purchaser, it may be desirable that the ownership of the equipment and materials is not to pass to the contractor unless he pays for them before their incorporation (paragraph 7).
It may be desirable for ownership of the works during construction to be allocated in certain circumstances to the purchaser, for example when he pays a substantial portion of the price in the form of progress payments during construction. In other circumstances, an allocation to the contractor may be desirable, for example if credit has been given by the contractor to the purchaser in respect of the payment of the price (paragraph 8).