Assignment Declaration of Credit

Hello,
I also have the problem that my construction company wants a security. I also want to pay the construction project completely in cash. I had read the notes in the GTC of the construction company, but did not think they would apply to my cash payment. However, I have not studied credit/interest law either.
Now my construction company wants to offer me a solution via a notary escrow account (I bear the costs) or a solution in which I open an account at a bank (overnight money) and sign a form "Pledge of funds" of this bank and then send it to the construction company. Then something will be done to the reference account (I have not understood that yet) and I can then only transfer to the construction company’s account. Nowhere else.
Has anyone ever heard of something like this?

Gerald

The second option is certainly cheaper. Is there any objection to using one of these two solutions, or what exactly is your question?

Now my construction company wants to offer me a solution via a notary account (I bear the costs) or a solution where I open an account at a bank (daily allowance) and sign a form "Pledging of credit" of that bank and then send it to the construction company. Then something will be done to the reference account (I haven't understood that yet) and then I can only transfer to the construction company's account. Nowhere else.
Has anyone ever heard of such a thing?

Hello, I (non-banker) have not heard of anything like this before. I can only share my experience with you: Back then, we presented the managing director of the construction company with 2 bank statements from online banking, simply printed out on white paper, not certified by anyone, from 2 (non-German) banks, he looked at them for 20 seconds, put them aside and the topic of finances was settled. In any other scenario, we would have gotten up and left the model house within a minute. It won't come to that that one's own cash is not good enough. It's outrageous what stories your contractual partner wants to impose on you. If your money is not good enough for him: other mothers also have beautiful daughters... um, houses.

Has anyone ever heard of something like this?

Yes; it happens quite often that contractors demand it.

However, depending on the wording of the contract design, there are only disadvantages (sometimes significant) for your side (regardless of whether it is via a notary account or pledge in favor of the contractor).

and I can then only send to the account of the construction company. Nowhere else.

That is indeed a piece of land. Not directly bad yet. The question is how the contract is exactly structured. For example, it cannot be that the construction company gets direct access to the account. You have exactly one (in words one) means of leverage over the construction company if there are defects during the construction. And that is your money. And you must not give up this means of leverage.

Hello, I (a non-banker) have never heard anything like this before. I can only share my experience: At that time, we presented the managing director of the construction company with 2 bank statements from 2 (non-German) banks taken from online banking, simply printed on white paper, confirmed by no one. He looked at them for 20 seconds, put them aside and the financial matter was settled. In any other situation, we would have stood up and left the show house within a minute. It’s not going to come to the point where your own cash isn’t good enough. It’s outrageous what kind of stories your contracting partner wants to impose on you. If your money isn’t good enough for him: Other mothers have beautiful daughters too... uh, houses.

Well, with my developer, unfortunately, it is not enough just to present my bank statements, because that is only a snapshot in time. Here is an excerpt from the contract conditions of my construction company:
The builder is entitled to provide proof of financing at his discretion, instead of providing security on the basis of ... in the form of financing assurance in the amount of the .. price by assignment of the loan disbursement claim, insofar as he takes out a loan for financing and, insofar as the builder uses equity capital, by assignment of a corresponding bank balance. The credit institution may assert the builder’s rights of refusal of performance and rights of retention in the event of claims from the assignment.

Yes, the question was whether anyone has already experienced this form with a daily allowance account. I find it a bit strange. But I will probably sign it anyway. Alone to avoid further costs. Whether it is outrageous ... hmm. We are in the year 2019. I built once before in the mid-90s. Back then, as a builder you chose plots, developers, and craftsmen. Today, it’s the other way around. Without connections and a lot of money, you cannot get craftsmen anymore. And the developers we asked all have very good salespeople. And when you then ask when construction can start, it is often said “not in 2019 anymore.” Even with my developer, who has the above quoted wording in the contract, we actually have to wait 4 months until the architects become active and planning begins. That is also quite harsh. But we had been warned about this beforehand.