Understanding the Taking Over Certificate in UAE Construction Projects

The Taking Over Certificate marks the most consequential moment in any construction project. It triggers the transfer of risk from contractor to employer, commences the defects liability period, stops delay damages, releases retention, and starts the clock on decennial liability. Yet the procedures surrounding its issuance remain a frequent source of disputes in the UAE.

This guide explains what a Taking Over Certificate is, when it should be issued, its legal consequences under UAE law and FIDIC contracts, and the practical steps parties must take to protect their interests at this critical stage.

What Is a Taking Over Certificate?

A Taking Over Certificate (TOC) is a formal document confirming that the construction works have been substantially completed and are ready for the employer to take possession. Under FIDIC contracts, which are the most widely used standard form in the UAE, the TOC is issued by the Engineer (or the Employer under the Silver Book) in accordance with Clause 10.

The TOC does not signify that the works are perfect. It confirms that the works can be used for their intended purpose, notwithstanding minor outstanding work or defects that do not substantially affect safe use.

Key Terminology

Different contracts use different terms for the same concept:

The contractual TOC and the regulatory Building Completion Certificate serve different purposes. The TOC governs the contractual relationship between employer and contractor. The BCC is a regulatory requirement from Dubai Municipality confirming compliance with building regulations. Both may be required before a building can be occupied and sold.

When Should a TOC Be Issued?

Under FIDIC Sub-Clause 10.1, the contractor may apply for a Taking Over Certificate when it considers the works are complete. The Engineer must then, within 28 days:

1. Issue the TOC, stating the date on which the works were completed, except for minor outstanding work and defects listed in the certificate; or
2. Reject the application, giving notice to the contractor with reasons, specifying the work required and defects to be remedied.

The Test for Completion

The works need not be 100% complete for a TOC to be issued. The test is whether the works can be used for their intended purpose despite any minor outstanding items. This reflects the common law concept of "practical completion" — completion for all practical purposes, not completion down to the last detail.

Under FIDIC 2017, the Engineer may issue a TOC where there is only "minor outstanding work and defects which will not substantially affect the safe use of the Works or Section for their intended purpose."

What constitutes "minor" is a matter of fact and degree. A defect that is merely trifling will not prevent completion. A defect that is more than trifling — one that affects the safe use or intended purpose of the works — will prevent the TOC from being issued.

Common Prerequisites for TOC Issuance

While specific requirements depend on the contract and project, typical prerequisites include:

• Works capable of being used for their intended commercial purpose
• All Tests on Completion successfully passed
• Necessary regulatory approvals obtained
• As-built drawings submitted
• Operation and maintenance manuals provided
• Training completed (where required)
• Outstanding work limited to minor snagging items

Legal Consequences of TOC Issuance

The issuance of a Taking Over Certificate triggers several significant legal consequences under both the contract and UAE law.

1. Transfer of Risk and Care

Upon taking over, responsibility for the care of the works passes from the contractor to the employer. The employer becomes responsible for:

• Insuring the completed works
• Maintaining the works
• Any damage occurring after taking over (except damage caused by the contractor)

This is why employers must ensure their insurance arrangements are in place before taking over. Failure to arrange adequate cover at this point can leave the employer exposed to significant uninsured losses.

2. Cessation of Delay Damages

The contractor's liability for delay damages (liquidated damages) ceases on the date stated in the TOC. If the TOC is issued before the contractual completion date, no delay damages are payable. If issued after, the employer may recover delay damages for the period of culpable delay.

3. Commencement of the Defects Liability Period

The Defects Notification Period (commonly called the Defects Liability Period or DLP) commences on the date of the TOC. Under FIDIC, this is typically 12 months, though it is often extended to 24 months for projects with significant mechanical and electrical components.

During the DLP, the contractor must return to site to remedy any defects notified by the employer. If the contractor fails to do so, the employer may carry out remedial works and recover the cost from the contractor — typically by deducting from retention or calling on the performance bond.

4. Release of Retention

The first half of retention (typically 50%) becomes due upon issuance of the TOC. Under FIDIC Red Book 1999, Sub-Clause 14.9, 40% of retention is released when a TOC is issued for a Section, and 50% when the TOC is issued for the whole works.

The second half of retention is released upon issuance of the Performance Certificate, following expiry of the DLP and completion of all outstanding defects.

5. Commencement of Decennial Liability

Under Articles 880-883 of the UAE Civil Code, the 10-year decennial liability period commences from the date of delivery of the works. In practice, this is the date stated in the Taking Over Certificate.

Decennial liability is strict. It covers any total or partial collapse of the building, or any defect threatening its stability or safety. The contractor and supervising architect are jointly and severally liable. This liability cannot be excluded or limited by contract.

6. Performance Certificate and Final Account

After the DLP expires and all defects have been remedied, the Engineer issues the Performance Certificate under Sub-Clause 11.9. This certifies that the contractor has completed its obligations under the contract.

Following the Performance Certificate, the contractor submits a Final Statement, the employer issues the Final Payment Certificate, and the final account is closed.

Deemed Taking Over: When the TOC Is Not Issued

Parties should be aware that the works may be "deemed" to have been taken over even without a formal TOC. Under FIDIC Sub-Clause 10.2, this occurs when:

• The employer uses any part of the works (other than as a temporary measure agreed by both parties); or
• The employer occupies any part of the works before the TOC is issued.

This "deemed taking over" provision exists because use or occupation by the employer demonstrates that the works are sufficiently complete for their intended purpose. It would be unfair to hold the contractor liable for delay damages or damage to the works once the employer has started using them.

Risks of Deemed Taking Over

Employers should exercise caution before using or occupying parts of the works prior to formal taking over. Doing so may inadvertently:

• Trigger deemed taking over of those parts
• Release the contractor from delay damages liability
• Start the defects liability period
• Transfer risk and insurance obligations to the employer

If early use is commercially necessary, employers should ensure this is either expressly permitted in the contract or agreed in writing with the contractor as a "temporary measure" that does not constitute taking over.

Sectional Completion and Partial Taking Over

Large projects are often divided into Sections, each with its own completion date and Taking Over Certificate. This allows the employer to take possession of completed portions while construction continues elsewhere.

Sectional Completion

Sectional completion is pre-planned and defined in the contract. Each Section has:

• A defined scope of works
• A separate Time for Completion
• A separate TOC
• A separate DLP
• Separate delay damages provisions

Partial Taking Over (Sub-Clause 10.2)

Partial taking over under Sub-Clause 10.2 is different. It applies where the employer uses or occupies part of the works that is not a defined Section. In this case:

• The part is deemed taken over
• Delay damages are reduced proportionally
• 40% of retention attributable to that part is released
• However, the DLP does not commence for that part until the whole works are taken over

This distinction is important. Sectional completion triggers all the consequences of taking over for that Section. Partial taking over under Sub-Clause 10.2 has more limited consequences.

Common Disputes Relating to TOC

Delayed or Refused TOC

One of the most common disputes arises when the Engineer delays or refuses to issue a TOC despite the contractor's application. This can occur where:

• The Engineer and contractor disagree on whether outstanding work is "minor"
• Required documentation (as-builts, O&M manuals) has not been submitted
• Tests on Completion have not been passed
• Regulatory approvals are outstanding

If the contractor believes the Engineer has unjustifiably refused or delayed the TOC, it may:

• Pursue a claim for extension of time and costs
• Refer the dispute to the Dispute Adjudication Board (DAB) or arbitration
• Argue that the works have been "deemed" taken over if the employer is using them

Outstanding Works Listed in TOC

The TOC should list all known outstanding works and defects at the date of issue. This list is not intended to be exhaustive — the contractor remains obliged to remedy any subsequent defects notified during the DLP.

Disputes often arise over:

• Whether items on the list are actually defects or variations
• The time allowed for completing outstanding works
• Whether new items added later were latent defects or new defects

Insurance Transition

The TOC triggers the transfer of insurance obligations. Disputes can arise where:

• The employer has not arranged insurance for the completed works
• There is a gap between the contractor's CAR policy expiring and the employer's policy commencing
• Damage occurs during the transition period and coverage is unclear

Parties should coordinate with their insurance advisors well before anticipated taking over to ensure seamless coverage.

Practical Recommendations

For Employers

1. Define completion requirements clearly in the contract. Specify what tests, approvals, and documentation are required before the TOC can be issued.
2. Do not use or occupy the works before taking over. Unless expressly agreed as a temporary measure, this may trigger deemed taking over and transfer risk prematurely.
3. Ensure insurance is in place. Coordinate with your insurers to ensure coverage for the completed works is effective from the date of taking over.
4. Prepare for the DLP. Have procedures in place to inspect the works, identify defects, and notify the contractor promptly during the defects liability period.
5. Retain sufficient security. Ensure retention and performance bond amounts are adequate to cover potential defect rectification costs.

For Contractors

1. Apply for the TOC promptly. Once the works are substantially complete, submit your application with all required documentation to start the 28-day clock.
2. Document the state of the works. Prepare detailed records (photographs, inspection reports) of the works at the time of your application to support your position if the TOC is disputed.
3. Maintain PI and decennial liability insurance. These policies must remain in place for 10 years or more after completion. Ensure renewals are not missed.
4. Resolve snag lists efficiently. Prompt completion of outstanding works listed in the TOC protects your retention release and reputation.
5. Understand the distinction between Sections and parts. The consequences of taking over differ depending on whether the works are a defined Section or a part under Sub-Clause 10.2.

For Both Parties

1. Coordinate on regulatory approvals. The contractual TOC and the Building Completion Certificate are separate. Both may be required before the building can be occupied or sold.
2. Address the final account early. Do not wait until the Performance Certificate to resolve disputed variations and claims. Early resolution benefits both parties.
3. Seek legal advice on disputes. Disputes over taking over can have significant financial consequences. Early legal advice can help resolve issues before they escalate.

TOC Under Dubai Law No. 7 of 2025

Dubai Law No. 7 of 2025, effective from January 2026, introduces new requirements for contractors operating in Dubai. While the law focuses on contractor registration and classification, contractors must retain original contracts, records, drawings, and related documents for a minimum of 10 years from the date of the completion certificate.

This record-keeping requirement aligns with the 10-year decennial liability period and underscores the importance of maintaining comprehensive project documentation beyond the date of taking over.

Key Takeaways

Conclusion

The Taking Over Certificate is far more than an administrative formality. It marks the point at which significant legal and commercial consequences are triggered for both employer and contractor. Understanding these consequences — and preparing for them — is essential to protecting your interests at this critical stage of any construction project.

Parties should ensure their contracts clearly define the requirements for taking over, coordinate insurance and regulatory approvals in advance, and seek professional advice promptly if disputes arise over the issuance or timing of the TOC.

How Kayrouz & Associates Can Help

Kayrouz & Associates' Construction Law team advises employers, contractors, and consultants on all aspects of project completion, taking over, and defects liability. Our services include:

• Reviewing and drafting taking over procedures in construction contracts
• Advising on disputes relating to TOC issuance and deemed taking over
• Advising on defects liability and dispute resolution
• Coordinating with insurance advisors on risk transfer at completion
• Advising on compliance with Dubai Law No. 7 of 2025

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