BÜ wants a declaration of assignment. How to avoid it?

Despite all criticism of the (mis)behavior of the TE, the GU is very likely using a clause here that is invalid (section 650m of the Building Code cannot be waived in general terms and conditions, and your excerpt looks exactly like that). Either you find a solution with the GU (e.g. a 20% guarantee, you can probably also demand a 5% guarantee), or you seek advice from a lawyer. I would never grant such an assignment to a GU.

Engaging a lawyer should be well considered. I speak from my own experience. In our case, the dispute value is €270,000 and the lawyer’s first invoice was just under €5,000 in advance. If it comes to a lawsuit including court costs, another approximately €20,000 would be due. Now my lawyer doesn’t want to continue because I told him that I do not like the numerous spelling mistakes in his letters sent to the opposing party (among other things, entire words are omitted and the capitalization of salutations like Ihnen and ihnen or Sie and sie is confused, which changes the meaning of the sentence) and he believes that this has damaged the trust relationship and he wants to end the cooperation. I assume he will present me with an invoice from which I will not get any of the advance payment back. Regarding your problem: since 1.1.2018 you have a legal right to a contract performance bond. Regardless of whether this is stated in the contract or not, you are entitled to it. Furthermore, the contract must contain a cancellation clause. If this is not included, you have the right to cancel for one year. That means the contract is void. Of course, this would only be interesting if you no longer want to continue building with this [BU] or if there is no amicable agreement.

I do not find an assignment declaration objectionable. He just wants the money to flow to him and you not to have any leverage. Basically, it is like this: you release the money at the bank and he cannot just call and say: now the next installment. The problem is only when the building stands, you do not release funds and he does not continue building. Unused amounts are "blocked".

A payment retention is unfortunately the only means of leverage the client has. I do not think it is a good decision to give this away. Then the contractor can do whatever they want. Even with major defects, where you would normally be able to retain twice the cost of defect rectification, this option is no longer available. That would be too risky for me.

I only skimmed through and don’t know if the questions or tips have already come up.

I would first of all call the bank. There you will find out what the general contractor can achieve with the assignment declaration at the bank, who authorizes the release of the payment, how it can be ensured that the full amount is not paid out in case of defects, how money can also be paid out that is not planned for the general contractor but for the landscaper, garage, etc., or similar.

Is there, in return, any warranty or completion bond?

Otherwise, I can understand the concerns of the original poster. Many years ago we had a case here where the bank wrongfully paid out the last installment to the general contractor without the client authorizing the release. At that time, there were major issues that were not yet completed and should have been withheld. Due to the full payment, of course, there was no leverage.

Shouldn't the bank pursue exactly the same interest as the client? The bank is only helped if the house has the paid value (in case of default). I could imagine that the bank is therefore keen not to simply release the payments freely just because the general contractor demands it.