Penalties and fines under the NCA in Kenya

Penalties and fines under the NCA in Kenya

The National Construction Authority (NCA), established by Act No. 41 of 2011, has the authority to levy harsh penalties on individuals and organizations who fail to comply with the law. Here we will discuss all NCA penalties and fines in Kenya. Also, check out our recent construction projects in Kenya.

This is intended to ensure that entities in the construction business adhere to professional values to protect consumers from poor quality and disregard for established procedures and rules.

The following are some of the NCA fines and penalties:

  • In addition, contractors who fail to renew their annual practicing licenses within the required time frames must pay three times the yearly renewal fee before continuing operations.
  • Contractors in the NCA1 category must pay Sh90,000, while those in the NCA2, NCA3, NCA4, NCA5, NCA6, NCA7, and NCA8 categories must pay Sh75,000, Sh60,000, Sh45,000, Sh36,000, Sh30,000, Sh15,000, and Sh10,000.
  • Foreign contractors who do not renew their licenses must pay US$ 4,500 (Sh460,000) to resume construction operations in the country. In addition, failure to comply with the NCA’s rules and regulations can result in fines and penalties for developers, consultants, and other individuals working on a construction site.
  • If convicted, a person who fails to obey the orders of an investigating officer faces a fine of up to Sh1 million or a jail term of up to three years, or both.
  • Falsifying documents for accreditation or licensing is a crime, and those who commit it face a fine of up to Sh50,000 or two months in prison or both.

Strict new rules are in place to combat cowboy contractors.

A new set of rules for protecting property investors from subpar contractors has gone into effect, bringing a slew of changes set to revolutionize the construction industry.

The National Construction Authority (Defects Liability) Regulations 2020, gazetted on April 20 by Housing and Urban Development Cabinet Secretary James Macharia, gives commercial building owners up to seven years to recall contractors to fix defects in projects at their own expense.

The rules have also increased the minimum liability period for patent defects to 12 months. This is the time between practical completion and handover of a building during which the contractor may return to the site to repair any patent defects such as cracked plaster or paintwork issues.

“A patent defects liability period shall be prescribed in every contract for the construction of a commercial building.” In addition, the notice states that “the patent defects liability period… shall be a minimum of twelve months after practical completion.”

Property owners will have another six years after the patent defects liability period expires to recall a contractor to fix structural defects that they did not detect during the period.

Construction of Commercial Buildings Law

Previously, contracts for commercial building projects only required a patent defects liability period. However, the NCA (Defects Liability) Regulations 2020 require arrangements to include a latent defects liability period that lasts at least six years after the patent defects liability period expires.

The rules also require contractors, subcontractors, and other relevant professionals to obtain insurance coverage for latent defects that may arise during the latent defects liability period.

The new rules have already sparked a heated debate among industry experts, who argue that the guidelines are incorrectly redefining concepts that have been used globally for decades.

“It appears that they are only legislating for defects liability concerning the commercial property. However, in a press interview, commercial property lawyer Alex Njage said, “I’m not sure what the rationale is.”

Gilbert Josiah Mungu, a lawyer in Construction Law and Arbitration, raised concerns about the duration for rectifying patent defects, arguing that it makes no business sense and would only delay the contractor’s final payment.

“Those flaws are easily identified and should be addressed right away. “It is not practical to have a period of not less than 12 months to carry out the rectifications,” he said.

How a Constructor is Held Responsible by NCA in Kenya

Other stakeholders have expressed concerns about the rules that hold a subcontractor liable for fixing patent defects discovered during the patent defects liability period.

“How will the contractor, professional, and subcontractor be held accountable? There is no definition or division of liability. It means that the individuals named are jointly and severally liable for any defects that may arise,” said quantity surveyor Nyagah Kithinji.

Mr. Kithinji criticizes the regulations for treating a property owner as an expert, transforming professionals into contractors, and holding them liable for structural flaws against all global best practices.

The Institution of Construction Project Managers of Kenya (ICPMK) has now demanded that the rules be suspended to allow for public participation to ensure that the law does not conflict with other industry practices.

“This Gazette Notice has raised significant concerns among our members, other construction professionals, and stakeholders in the construction industry,” ICPMK Chairman Tom Oketch wrote to CS Macharia on May 18.

“Unfortunately, it appears that we, along with various other stakeholders in the construction industry, missed the opportunity for public participation that the Statutory Instruments Act, 2013, Laws of Kenya provides for.”

Increase patent defect liability period and a conflict with industry rules. Government regulations are also causing concern at ICPMK. The association also questions the logic of focusing solely on commercial buildings.