Bank Guarantee - Meaning and Impact

Hello,

could someone please explain to me exactly what this means? Somehow I don’t quite understand it. What impact would this have?

Guarantee of the client
The client is obliged, within 14 days after the planning meeting, to provide the contractor with an unlimited and independent guarantee from a reliable guarantor (credit insurer, bank, or savings bank) in the amount of the last installment according to § 2 No. 4 of the contract for the fulfillment of all payment obligations incumbent upon him from this contract.
The contracting parties agree that the contractor is not obligated to commence the work before the guarantee is provided. If the client does not timely fulfill the obligation to provide the guarantee, the contractor is entitled to withdraw from the contract.

Regards

Hello,

Suretyship of the client
The client is obliged to provide the contractor with an unlimited and self-debtor surety within 14 days after the planning meeting ....

This is - translated - an assignment of the last installment (some providers also "sell" this as security for the builder under the designation 'last installment into a notary escrow account').

If it turns out that defects are recorded during the house acceptance (not uncommon, but normal, since a house must be "handed over" free of defects and not built free of defects), you cannot reduce or withhold the last installment until the defects are remedied. However, the contractor can demand the entire surety amount and will receive it.

This procedure has been incorporated into the contracts of some providers to counter the "sport" of many builders to withhold the last installment; whether justified or not.

Rhineland regards

Thank you for the information. Does it cost anything at the bank when they issue the guarantee?

Or can I also use this offer?

Link removed; Regards Bauexperte

Thanks for the info. Does it cost anything at the bank when they issue the guarantee?

Of course. How much, the bankers here can surely answer. You also have no other choice but to obtain this guarantee through your financing institution or your house bank; according to the above guarantee text, insurance companies are not provided for. Rhenish regards

but it does say in the passage: Kreditversicherer

and according to the FAQ on the website, it is exactly for this case (Absicherung und Bürgschaft der letzten Rate)

Or did I misunderstand something?

Thanks in advance for the answers. It always happens so quickly here.

See if it also works without it! You should try to negotiate this passage. Are you tied to the provider (= does he own the property you want?). Contact other construction companies that offer contracts that are better for you. At the very least, you should require that the contractor bears the costs of this guarantee.

Apart from the costs on your side, I see no serious disadvantages. You owe the final installment anyway. But if this clause is already in the contract, there may be others as well. Have the entire contract reviewed! Before signing.