Assignment Declaration of Credit

Hello,

My house bank does not do exactly such assignment declarations.

That is also reasonable.

However, I don't really understand your agitation. Nowhere in the following text does it say that you have to make an assignment, only a financing confirmation (FB); insofar, "toxicmolotow's" (what a nickname, luckily there is copy + paste) related hint was important.

The contract states under financing:

The client undertakes to provide, promptly after receiving the building application or building notification documents, at the latest with the building permit or confirmation of receipt of the building notification, an irrevocable and unlimited financing confirmation or a bank guarantee from a financial institution pursuant to the agreed payment plan (see point 3) for the provision of the total contract sum [...]

It goes without saying that the FB must be irrevocable; of course your BU wants to have its claims against you secured.

If this excerpt really is everything on the subject of financing, then your BU cannot now come up with a unilateral demand for assignment; he should have thought that through earlier. In this respect, he only has 2 options – to look for a solution with you or to terminate the contract subsequently. The latter he will hardly do, because it would cost him more money than the time spent looking for solutions with you.

Somehow I was a bit naive to sign that.

I think you got off with a lucky escape, "although" you didn't read!

Isn't this clause: an irrevocable and unlimited financing confirmation invalid?

Why should it be?

Installment 12 is 2%
Installment 13 is 5%

So not exactly a small amount of money. The last installment is very important to me. If you withhold part of an installment during construction due to some defects, then you risk a construction stop quickly. With the last installment, you simply have more pressure. Or am I seeing this wrong.

You see it as most builders do, and from my point of view that is wrong and shortsighted; whether the last installment is 5 or 2% is so irrelevant. What if steps 1-11 are divided such that the 5% at the end won't help you in the worst case? Maybe – which I don't wish for you – irreconcilable conflicts have already arisen in the first third, but you have already overpaid and in case of contract termination the remaining money is not enough to get you moved in?

I can also get a bank guarantee from any other bank. Only it doesn't come cheap and is that really better for me? I have not particularly informed myself about bank guarantees.

Why don't you take the easiest way and explain to your BU – that you have the money in a savings account? Since he presumably is not averse to his money either, he will probably show understanding for your situation and look for a practical solution with you. This could, for example, be that you set up a construction account just for this purpose; of course with an initial sum corresponding to the progress payments.

Rhenish greetings

If this excerpt is really everything on the subject of financing, your BU cannot now come up with the one-sided demand for assignment; they should have considered that earlier. In this respect, they only have 2 options – to look for a solution with you or to terminate the contract retroactively. The latter is unlikely, as it would cost them more money than the time spent looking for solutions with you.

Thank you very much for your answer.

I owe the construction company an irrevocable and unlimited financing confirmation or bank guarantee. Why should the construction company terminate on me?

If I cannot provide a financing confirmation, then a bank guarantee must be provided.

This assignment declaration is connected with the condition that every invoice must be approved and partial invoices can also be initiated. So invoices can also be reduced because of defects. Is an irrevocable and unlimited financing confirmation that much different? The capital can then also only be paid out to the company.

Personally, I do not even know what the lesser evil is.

"Irrevocable" is to be avoided for the reason that in the event of the insolvency of the developer, the outstanding amount can no longer be paid out to other companies responsible for completing the house.

We are members of the Bauherren-Schutzbund and the advisor strongly warned us against such formulations, as they have often led to private insolvency of the builders.

We have received a regular financing confirmation from our bank, which only shows that the total amount is covered by bank-financed external capital and our own equity. I forwarded this to our [GU] today and have already received a response that this is absolutely sufficient for him.

We have received a completely normal financing confirmation from our bank, which only shows that the total amount is covered by external capital provided by the bank and our own equity. I forwarded this to our general contractor today and have already received a response that this is absolutely sufficient for him.

That would basically be enough for us as well, but who is supposed to issue me this financing confirmation if you are only paying with equity?

That is exactly the problem.

Can't something like that possibly be arranged through a trust account with a notary?

Can't something like that possibly be handled through an escrow account with a notary?

With an escrow account, you have the same problem as with this assignment declaration. If the construction company is insolvent or goes bankrupt, the notary cannot release the account until the insolvency administrator does so. In my view, an escrow account does not solve the problem. The money is still irrevocably tied to the construction company.