NomOm
2013-01-19 16:53:51
- #1
Hello,
unfortunately, we also signed a construction contract, which can be found here in the forum and elsewhere as the "Town & Country standard contract". We are now desperately looking for a way to get out of the contract without paying the 10% contractual penalty. But first, let's take it step by step:
We had found our "dream property" and everything seemed fine with the owner of the property. So finally, after some searching, we ended up with the current developer and ultimately signed the contract. Now the property owner wants to sell his parcel to someone else.
The contract contains the following (relevant) clauses:
Termination rights of the client and the contractor are governed by the Building Code. If termination occurs before construction begins, without fault of the contractor, a flat fee or flat compensation of 10% of the contract amount is due.
Property Reservations:
1. The client is entitled to withdraw from the construction contract if he does not acquire or select a property within 6 months after signing the contract.
2. The client is free to withdraw even after this period has expired, provided that the contractor has not yet applied for a building permit or commissioned the necessary planning services for this or a building ground investigation.
3. If the client has not yet acquired or selected a property within 3 months after signing the contract, the contractor is entitled to prove properties to the client (right of tender). In the event of withdrawal, the client undertakes not to develop any of the proven and rejected properties differently within 2 years after exercising the right of withdrawal. If the client violates this obligation by developing a rejected property within the aforementioned period, the client must pay the contractor a lump sum of 10% of the fixed price agreed upon at the time of withdrawal.
4. If the client withdraws at a time when construction financing has already been approved by a bank or savings bank and he has decided on a property, even without acquiring it, the client is also obliged to pay a flat rate of 10% of the fixed price agreed upon at the time of withdrawal.
---
In our case, unfortunately, the first reservation does not apply, as obviously a property was selected. Fortunately, we do not yet have construction financing from a bank, so number 4 also does not apply.
The second reservation is interesting: Can the developer claim to have performed planning services or even commissioned a building ground investigation when the property is no longer available for selection?
We have been advised elsewhere not to terminate the contract under any circumstances, because then the 10% would definitely be due. Although a flat rate of 10% would not be legally compliant, current case law allows 5%-15%, so the developer would in any case succeed with the 10%. Instead, we should do nothing and leave it to the right of tender. However, no one could tell us exactly what to expect there. (We assume, however, that it will actually be extremely difficult to find an adequate replacement property. Does that help us?)
What would you advise us? Should we now withdraw and refer to the second reservation? What financial consequences would that have for us?
Or actually do nothing and leave it to the right of tender? What might then happen to us?
How would you proceed?
unfortunately, we also signed a construction contract, which can be found here in the forum and elsewhere as the "Town & Country standard contract". We are now desperately looking for a way to get out of the contract without paying the 10% contractual penalty. But first, let's take it step by step:
We had found our "dream property" and everything seemed fine with the owner of the property. So finally, after some searching, we ended up with the current developer and ultimately signed the contract. Now the property owner wants to sell his parcel to someone else.
The contract contains the following (relevant) clauses:
Termination rights of the client and the contractor are governed by the Building Code. If termination occurs before construction begins, without fault of the contractor, a flat fee or flat compensation of 10% of the contract amount is due.
Property Reservations:
1. The client is entitled to withdraw from the construction contract if he does not acquire or select a property within 6 months after signing the contract.
2. The client is free to withdraw even after this period has expired, provided that the contractor has not yet applied for a building permit or commissioned the necessary planning services for this or a building ground investigation.
3. If the client has not yet acquired or selected a property within 3 months after signing the contract, the contractor is entitled to prove properties to the client (right of tender). In the event of withdrawal, the client undertakes not to develop any of the proven and rejected properties differently within 2 years after exercising the right of withdrawal. If the client violates this obligation by developing a rejected property within the aforementioned period, the client must pay the contractor a lump sum of 10% of the fixed price agreed upon at the time of withdrawal.
4. If the client withdraws at a time when construction financing has already been approved by a bank or savings bank and he has decided on a property, even without acquiring it, the client is also obliged to pay a flat rate of 10% of the fixed price agreed upon at the time of withdrawal.
---
In our case, unfortunately, the first reservation does not apply, as obviously a property was selected. Fortunately, we do not yet have construction financing from a bank, so number 4 also does not apply.
The second reservation is interesting: Can the developer claim to have performed planning services or even commissioned a building ground investigation when the property is no longer available for selection?
We have been advised elsewhere not to terminate the contract under any circumstances, because then the 10% would definitely be due. Although a flat rate of 10% would not be legally compliant, current case law allows 5%-15%, so the developer would in any case succeed with the 10%. Instead, we should do nothing and leave it to the right of tender. However, no one could tell us exactly what to expect there. (We assume, however, that it will actually be extremely difficult to find an adequate replacement property. Does that help us?)
What would you advise us? Should we now withdraw and refer to the second reservation? What financial consequences would that have for us?
Or actually do nothing and leave it to the right of tender? What might then happen to us?
How would you proceed?