Civil Litigation

Construction Cost Litigation Lawyer

Construction Cost Litigation Lawyer | Getting paid for work already done

Summary

A construction cost dispute arises when the party who ordered work refuses to pay the full contract price, citing defects, incomplete scope, or disagreement over additional work. Under Korean law this is treated as a claim for the contract price under a construction contract (도급계약, 민법 제664조), and the outcome usually turns on which party can prove what was actually agreed and what was actually built. Because most disputes hinge on documentary evidence — contracts, change orders, site logs, photos — the strength of a claim is often decided before the lawsuit is even filed.

Civil · Construction Applicable law: Civil Act (민법), Framework Act on the Construction Industry (건설산업기본법)

Construction Cost Litigation | Who has to prove what

Construction cost cases are won or lost on documentation. Courts will not simply accept a contractor's invoice or an owner's complaint at face value.

The contractor must prove the work and its value

The party claiming unpaid fees must show that the contracted work was completed and what it is worth, typically through the written contract, a detailed cost breakdown (내역서), progress photos, and site supervision records. Courts often appoint a court-commissioned appraiser (감정인) to assess the value of completed work when the parties dispute the amount (민사소송법 제335조 관련 감정 절차).

Oral agreements are the most common failure point

Many construction disputes start because scope changes were agreed verbally on-site and never documented. Without a written change order or at least a text message/email trail, a contractor claiming additional payment for extra work faces a significant evidentiary disadvantage.

Interest and delay damages

If payment is wrongfully withheld, statutory interest can accrue on the unpaid amount from the due date, and if litigation is filed, the heightened statutory rate under the Act on Special Cases Concerning the Promotion of Recovery of Legal Money and Bonds applies from the date the lawsuit is served (소송촉진 등에 관한 특례법 제3조).

Construction Cost Litigation | Defect deductions and warranty claims

Owners frequently withhold part of the payment on the ground that the completed work has defects. This is one of the most litigated areas in construction disputes.

The owner's right to demand repair or a price reduction

If the completed work contains defects, the owner may demand that the contractor repair them, and may claim damages equivalent to the cost of repair instead of, or alongside, a reduction in the price (민법 제667조). This right does not automatically cancel the underlying obligation to pay for the parts of the work that are defect-free.

Defect liability period limits how far back a claim can reach

Claims based on defects are generally subject to statutory limitation periods depending on the type of structure and defect (민법 제671조), and separately the Framework Act on the Construction Industry sets warranty periods by construction type for licensed contractors (건설산업기본법 제28조). An owner who raises defect claims years after handover may find the claim time-barred.

Set-off in practice: partial withholding is common but risky for owners

Owners sometimes withhold the entire remaining balance to pressure the contractor into repairs, but courts scrutinize whether the amount withheld is proportionate to the actual repair cost. Over-withholding can itself expose the owner to a counterclaim for the excess plus delay interest.

Construction Cost Litigation | Additional work and change orders

Disputes over whether extra work was authorized, and at what price, are the single most common trigger for construction litigation.

Was the additional work actually ordered?

A contractor cannot unilaterally decide to do extra work and bill for it; there must be evidence that the owner (or its authorized site manager) requested or approved the change. Site diaries, supervisor sign-offs, and even KakaoTalk message threads are commonly submitted as evidence of approval.

Pricing the extra work when no price was agreed

When extra work was clearly performed but no price was fixed in advance, courts will often rely on an expert appraisal of reasonable cost, benchmarked against standard unit-cost tables (표준품셈) or comparable market rates, rather than accepting either party's unilateral figure.

Construction Cost Litigation | Securing payment before and during litigation

Winning a judgment is only half the battle if the owner has no assets left by the time the case ends. Securing the claim early is often as important as the merits.

Contractor's statutory lien on the building

A contractor who has not been paid may be entitled to a lien (유치권) over the building or site it worked on, allowing it to retain possession until payment is made, provided the requirements for a valid lien are met (민법 제320조). This is a powerful practical lever but is frequently disputed and requires careful handling to avoid claims of unlawful occupation.

Provisional attachment before filing suit

Before or alongside filing the main lawsuit, a creditor can apply for a provisional seizure (가압류) of the owner's bank accounts, real estate, or receivables to prevent asset dissipation while the case is pending. This step is often what actually secures recovery, since a favorable judgment against an asset-less debtor is difficult to enforce.

Construction Cost Litigation | From dispute to recovery

Initial review of contract and records
We review the construction contract, cost breakdown, change orders, site records, and payment history to assess the strength of the claim or defense before any filing.

Demand and negotiation
A formal payment demand or defect notice is often sent first, both to preserve the record and because many disputes resolve at this stage without litigation.

Provisional attachment / lien assessment
If there is a risk the counterparty will dissipate assets, we evaluate whether a provisional seizure (가압류) or a construction lien (유치권) should be put in place before or alongside the main suit.

Filing suit and court-appointed appraisal
Once filed, the court frequently appoints an appraiser to assess the value of completed work, additional work, or defects (감정) — this appraisal often becomes the decisive piece of evidence.

Judgment and enforcement
After judgment, if payment is still not made voluntarily, we pursue compulsory execution against the debtor's assets, bank accounts, or receivables.

Construction Cost Litigation | How fees are calculated

Retainer (착수금)
Generally set with reference to the amount in dispute (the unpaid construction cost claimed or the defect deduction contested) and the complexity of the evidentiary record, particularly whether expert appraisal will be required.

Contingency fee (성공보수)
If applicable, calculated as a percentage of the amount actually recovered or successfully defended against, agreed in advance and confirmed in the retainer agreement.

Appraisal and expert costs (감정료)
Court-appointed appraisals to value completed work, additional work, or defects involve separate appraiser fees, which are advanced by the requesting party and later allocated according to the outcome.

Provisional attachment / lien-related costs
Filing a provisional seizure (가압류) typically requires a court deposit (공탁금) or guarantee insurance premium, which is a cost distinct from attorney fees and calculated based on the amount secured.

Enforcement costs
If compulsory execution is needed after judgment, additional costs for asset investigation and execution procedures may apply.

※ Costs vary depending on case complexity and specific circumstances; exact fees will be provided during consultation. No specific outcome is guaranteed.

Construction Cost Litigation | Self-Check Before You Contact a Lawyer

1️⃣ For contractors chasing unpaid fees

Do you have a written contract or at least a written cost breakdown (내역서)?
Do you have evidence (photos, site logs, messages) showing the work was completed as described?
If additional work was performed, is there any written or message-based approval from the owner?
Has the owner made any partial payment that could be treated as an admission of the debt?

2️⃣ For owners disputing a payment demand

Have you documented the specific defects with photos and, ideally, a written notice to the contractor?
Do you have an estimate of the actual repair cost, rather than an arbitrary deduction?
Was the scope of work that was actually completed different from what was contracted?
Is there a risk the contractor will assert a lien (유치권) over the property?

3️⃣ Before filing a lawsuit

Is there a real risk the other party will dissipate or hide assets before judgment?
Have you calculated the exact amount owed, including any applicable delay interest?
Is expert appraisal likely to be necessary to establish the value of work or defects?
Do you know the other party's assets well enough to plan for enforcement after judgment?

4️⃣ For subcontractors dealing with non-payment up the chain

Who is your direct contractual counterparty — the general contractor or the project owner?
Is there any assignment of claims or direct payment arrangement that could let you claim against the owner directly?
Have you preserved records of your own subcontract scope and pricing separately from the main contract?

Frequently Asked Questions

Q. The client is refusing to pay the final balance, claiming there are defects. What can I do?

A. First, document the actual condition of the completed work with photos and a written response to the defect claims, since owners must show the deduction is proportionate to actual repair cost (민법 제667조). If the amount withheld is clearly excessive relative to any real defect, a lawsuit for the unpaid balance with a request for expert appraisal is often the most effective route.

Q. Can I get paid for extra work that was only agreed verbally on site?

A. Yes, but it is harder without written evidence. Courts will look at site diaries, text messages, photos of the extra work, and any conduct by the owner (such as making partial payments referencing the extra work) as circumstantial evidence that the work was authorized and should be paid for.

Q. How long do I have to file a claim for defects after the building was handed over?

A. The limitation period depends on the type of structure and defect under the Civil Act (민법 제671조), and licensed contractors are also subject to warranty periods set by construction type under the Framework Act on the Construction Industry (건설산업기본법 제28조). Because these periods vary significantly by structure type, the specific facts of the handover date and defect type need to be checked.

Q. Can I refuse to hand over the building until I get paid?

A. A contractor may be entitled to exercise a lien (유치권) over the property it worked on until payment is received, if the statutory requirements are met (민법 제320조), but this is frequently contested by owners and can expose the contractor to counterclaims if the lien is asserted improperly. Whether a valid lien exists depends heavily on how possession was maintained and whether the underlying claim is genuinely connected to the property.

Q. The other party has no money — is it even worth suing?

A. A judgment is only useful if there are assets to enforce against, so before or immediately after filing suit we typically evaluate whether a provisional seizure (가압류) of bank accounts, real estate, or receivables is appropriate to preserve recoverable assets while the case proceeds.

Q. Do I need an expert appraisal for every construction cost case?

A. Not always — if the amount and scope of work are clearly documented in the contract and both sides agree on what was built, appraisal may be unnecessary. Appraisal becomes important specifically when the parties dispute the value of completed work, the scope of additional work, or the cost of repairing defects.

Q. What happens if the general contractor doesn't pay, but I worked as a subcontractor?

A. Subcontractors generally must pursue the party they directly contracted with (usually the general contractor), though direct payment claims against the project owner may be possible in limited circumstances involving assigned claims or specific statutory protections for subcontractors under the Framework Act on the Construction Industry. The exact structure of the contract chain determines who can be sued.

Q. Is it better to negotiate first or file suit immediately?

A. It depends on the risk of asset dissipation and the counterparty's responsiveness; a written demand is usually sent first both to create a paper trail and because many disputes settle once the other side sees a firm, documented position. If there's a real risk that assets will be moved or hidden, provisional attachment should be considered in parallel with or even before the demand.

Q. Does a written contract have to exist for me to sue for unpaid construction fees?

A. No — a construction contract does not need to be in writing to be enforceable under Korean law, but without a written contract, proving the agreed price and scope of work becomes significantly harder and often requires other evidence such as invoices, bank transfer records, and communications with the other party.

Official References

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