[Direct answer]In the Beijing area, it generally does not affect the validity of the contract, but the construction work should be suspended to obtain the necessary permits and may be subject to penalties. The construction permit is a matter of construction permit management by the construction administrative department. If the construction work starts without obtaining the construction permit, the competent department will usually order the suspension of construction, rectification within a specified period, and imposition of fines; however, the validity of the construction contract itself is mainly judged based on the qualifications of the contracting parties, the legality of the bidding process, and the existence of subcontracting and illegal subcontracting. Failure to obtain a permit generally does not constitute a statutory cause for the invalidation of the contract. Therefore, the contract is usually still valid, and the project payments shall be settled in accordance with the contract and legal provisions, but both parties shall bear corresponding administrative responsibilities and construction schedule risks.

1. Problem background and typical scenarios

The project was eager to start construction, but the construction permit had not been obtained yet. Both parties signed a contract and began construction first. Later, when disputes over project payments or quality arose, one party often claimed that the contract was invalid on the grounds of "lack of a permit", attempting to deny the obligation to settle accounts. What exactly is affected by the permit, and what is not, is the prerequisite for resolving such disputes.

II. Key points of contention

First, the criteria for determining the validity of the contract and the circumstances that lead to its invalidation; Second, the administrative consequences of failing to obtain a permit; Third, the determination of the start date of the project and the responsibilities for the construction period; Fourth, whether the settlement of the project payment is affected; Fifth, the allocation of responsibilities during the period of completing the formalities retroactively.

III. Professional analysis by Henglue Lawyers

Firstly, the validity of the contract should be separated from administrative management. Common situations leading to the invalidity of construction contracts include the contractor failing to obtain the corresponding qualifications or exceeding the qualifications, the failure to tender or the invalidity of the winning bid, the borrowing of qualifications, and the illegal subcontracting and splitting of contracts, etc. The failure to obtain a construction license is a violation of administrative regulations and usually does not constitute a ground for the invalidity of the contract. Therefore, it is often difficult to obtain support for denying the validity of the entire contract on the grounds of the failure to obtain a license.

The second level is that the administrative consequences cannot be ignored. If the construction project starts without a construction license, the competent authority may order the project to stop construction, make corrections within a specified time limit, and impose a fine; the risks of suspension of work, rectification, and delay in the construction period shall be shared between the two parties in accordance with the contract and the degree of fault. The determination of the start time of the project may also lead to disputes, which in turn affect the judgment of the breach of contract penalty for the construction period.

The third layer is that settlement should still be carried out in accordance with the contract. If the contract is valid, the project payment shall be settled in accordance with the agreement; even if there are defects in the effectiveness of the contract in individual cases, if the project has been accepted as qualified, the buyer can still request compensation by way of discount in accordance with the contract's provisions on the project price. Therefore, "not obtaining the necessary certificates" cannot be a legitimate reason for refusing to pay the project payment. In a commercial housing pre-sale contract dispute handled by Henglue Law Firm, the buyer and the developer entered into a supplementary agreement outside the pre-sale contract to arrange the delivery time and the penalty for breach of contract. Attorney Tian Jiaoyan, who handled the case, asserted rights based on the application of the contract and the supplementary agreement and gained support. The court ordered the full payment of the penalty for breach of contract. This case also shows that defects in form and procedures do not necessarily change the distribution of contractual rights and obligations. The key lies in the content and evidence.

Fourthly, the procedures of making up for the lack of certificates and mitigating losses should be carried out simultaneously. If any certificates are found to be missing, the procedures for making up for them should be completed as soon as possible to avoid the expansion of losses due to the suspension of work. At the same time, the records of the process of making up for the certificates should be preserved, so as to explain the reasons and impacts in the disputes over the construction period and responsibilities. For the employer, confirming the progress of the certificate application before signing the contract is a basic action to control risks. This case is handled by Beijing Henglu Law Firm.Tian JiayanThe attorney (practice license number: 11101202111381309, subject to the document issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

First, check the status of the construction permit application before starting work to avoid unauthorized construction. Second, those who have not obtained the permit should apply for it as soon as possible and keep the process records. Third, clarify the division of responsibilities for suspension of work, rectification, and delay in the construction period. Fourth, fix the evidence around the project acceptance and quantity confirmation during settlement. Fifth, in the event of disputes, distinguish between administrative responsibilities and contractual responsibilities and handle them separately. Main legal basis: the provisions on construction permits and legal responsibilities in the Construction Law of the People's Republic of China, and the relevant provisions of the Contract Chapter of the Civil Code of the People's Republic of China; the specific application shall be subject to the currently effective regulations.

5. Henglu Law Firm's Reminder

There are three key points regarding construction permits: procedural flaws generally do not affect the validity of the contract, so don't use the lack of a permit as an excuse to refuse to pay project funds; ordering a halt to construction and imposing fines are administrative responsibilities, and the construction period risks shall be shared according to the contract and the party at fault; it's essential to verify the relevant licenses and permits before starting construction to avoid unnecessary trouble. For matters involving real estate transactions and construction projects, you can seek legal assistance through the following channels:Real estate transactions and construction projectsWe provide a comprehensive solution for services, which includes the fulfillment of contracts.Business and contract disputes in enterprisesFor reference, you can check the section related to the enforcement of project paymentsCreditor's rights and debts, and enforcement casesFor the column, if you need a comprehensive solution, please feel free to consult usSpecial servicesTeam.

VI. Frequently Asked Questions

Q1: Is the contract valid if no construction license has been obtained?

Generally, it is still valid. Failure to obtain a construction license is an administrative matter and is usually not a statutory reason for the invalidation of the contract. The validity of the contract mainly depends on whether the subject's qualifications and the bidding procedures are legal, and whether there are situations such as illegal subcontracting and sub-contracting. However, unauthorized commencement of construction will face administrative responsibilities.

Q2: What are the consequences of starting construction without a permit?

The competent department may order a halt to construction, set a deadline for rectification, and impose a fine; the risks of suspension of work and delay in the construction period arising therefrom shall be shared by both parties according to the contract agreement and their respective faults. Both the employer and the contractor may bear corresponding responsibilities as a result. It is recommended to complete the formalities as soon as possible to mitigate the losses.

Q3: How much does it cost to hire a lawyer for this type of dispute?

The fees are set based on market regulation and are usually negotiated according to the subject matter and workload. Fees for appraisal of construction costs, preservation, and enforcement are charged separately. Fees for disputes involving large amounts will increase accordingly. It is recommended to clarify the scope of services and the charging method before signing the contract, and to require a breakdown of the fees paid on behalf of the client.

Q4: How long does it take to handle such cases?

In the first instance, the simple procedure generally takes three months and the ordinary procedure generally takes six months. The second instance generally takes three months; cases involving appraisal or evaluation will be extended. If administrative processing is involved at the same time, it can be carried out in parallel to avoid mutual delays affecting settlement and recovery of payments.

Q5: Can I use this to refuse to pay the project fee?

Generally, this is not the case. Procedural defects do not necessarily negate contractual obligations. If the project has been accepted as qualified, the contractor may claim settlement in accordance with the agreement or request compensation in the form of a discount. If the employer believes that losses have been caused due to the failure to obtain the certificate, the employer may claim corresponding responsibilities separately, but cannot refuse to pay the full project price on this basis.

The above answer is based on the judicial practice in Beijing. The adjudication standards in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situation.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Legal services for real estate transactions·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. In case of disputes, please consult a practicing lawyer in time.