Conclude a construction contract under reservation?

Hello,

I would need your expert advice again

Is it common to conclude a contract with reservation??

We have an offer for a plot of land and a semi-detached house, everything fits so far. Now the bank wants a detailed construction cost breakdown, a living space calculation and some other object data from the developer...

Now the developer says that we would first have to sign a contract with reservation before he provides all the information to the bank. Since this is already the second developer asking this from us, I am wondering if this is common???

I have some concerns in case the financing is rejected. According to the developer, I would incur NO costs if I presented a rejection from 3 banks.

I would be grateful for information

Regards

Dean

Hello,

I would need your expert advice again

Is it common to conclude a contract with reservation??

Apparently this is standard for many. Beware, your right of withdrawal after 3 bank rejections is not entirely without conditions. Do your research, decide on a financing concept that convinces you in terms of cost and overall structure (security). Unfortunately, this is often rejected – and often you have signed with the contract that the developer presents financing options to you, whether they suit you or not does not play a big role. The fact is there is a financier, so the contract applies!

We have an offer for a plot of land and a semi-detached house, so far everything fits. Now the bank wants from the developer a detailed breakdown of construction costs, a calculation of living space and some more object data...

This is needed by every serious financier. By the way, you should need this as well.

Now the developer says that we have to sign a contract with reservation first before he gives all the information to the bank. Since this is already the second developer who demands this from us, I wonder if this is usual???

These are not partners for the biggest investment you make in your life.

I have some concerns if the financing is rejected. According to the developer, I would incur NO costs if I present a rejection from 3 banks.

I would be grateful for information

Regards

Dean

As written above, the risk is either that you have financing you don't like, or you bear damages for the developer! Do you want that?

Kind regards
JoS
Advice – but fair!

Hello,

Now the developer says that we first have to sign a contract with reservation before he gives all the information to the bank.

I cannot understand why a developer does not provide the data for his potential customer. Putting together this data is a matter of 15 minutes. Why does a contract always have to be signed immediately?

I don’t understand that all day long.

Regards

Hello Dean,

Is it common to conclude a contract under reservation??

Sometimes sensible, sometimes a necessary evil when public funds form the core of the financing.

Now the bank wants a detailed construction cost breakdown, a calculation of living area, and some other property data from the developer..

This is often the same old game – as a rule, the banks are unable to create a personal financing framework. Usually, all it takes are the income conditions and a few personal details. Equipped with this, every potential builder knows what he can finance and can calmly decide how much he wants to finance. For this, no exact floor plans or contracts under reservation are needed! Find an independent financing broker – the emphasis is on independent, not tied to any institute! – and you will see, it can also be simple!

Now the developer says that we must first sign a contract under reservation before he gives all the information to the bank. Since this is already the second developer asking this from us, I wonder if this is usual???

With this procedure, the banks are playing into the hands of the home providers; currently, the Ing-Diba is particularly persistent. I currently have a similarly structured case where this financier insisted on the well-known form 153/154 (Kfw 70). What they forget is that this form can only be created upon submission of the structural engineering, which – with reputable companies – is only prepared after the building permit is submitted. The background is simply explained: if the structural engineering is only created based on the building application plans, there is always the residual risk for the builder that the building authority may come up with a change. As a result, the structural engineering would have to be recalculated and the builder would be stuck with the additional costs, because this financer does not bear the risk of their own demands. I was able to convince the friendly employee of the financer that there is a simpler and more cost-effective way for the wallet of my client; without putting the bank in a tight spot.

I have some doubts if the financing is rejected. According to the developer, I would incur NO costs if I provide a rejection from 3 banks.

That depends crucially on the wording of the withdrawal clause and the seriousness of the developer; if both ends agree, there is usually no risk for you.

@E.Curb

I can’t understand why a developer doesn’t provide the data for his potential customer. Gathering this data takes about 15 minutes. Why does a contract always have to be signed right away? I don’t get it all day long

Because it’s not quite as easy as you describe. All documents created in architecture – including living space regulations – can be compiled and handed to the potential builder within minutes. However, with the form “Confirmation for loan application „Energy-efficient Building“ (153/154)“, the situation looks quite different for the reasons explained above.

Kind regards

Hello,

With the form “Confirmation for the loan application „Energy-efficient Building“ (153/154)”, the situation looks completely different for the reasons described above.

that is probably true. I had only understood

....some object data...

not a confirmation for the loan application Energy-efficient Building. That is certainly somewhat more complex and no longer falls under a service.

Regards

Thank you very much for your answers!

...I will then take a good look at the withdrawal agreement in the contract, but for that I need to get the contract in front of me again because when I wanted to read the contract quietly at home before signing it, the developer did not want to give me the documents.

In my opinion, this procedure rather unsettles the customers and makes them back out again. We have indeed spoken with some well-known companies, but unfortunately this approach seems to be common.

Regards

Dean