Construction company price increase of 25% – Expired fixed price guarantee

It seems that in recent months there has been a lack of open communication on both sides. A 25% price increase can certainly be announced to a contracting partner in writing. However, in the absence of this, I also see an opportunity:

I would first write the "slick letter." If then afterwards something comes out between the promised 10 and 15%, you are still within the range you expected anyway.

If you have no interest in your house, you will also hear it at the next appointments. Until then, I would stay relaxed and keep my fingers crossed that it will work out now!

I would inquire whether the house construction company differentiates between "simple" and "more complex" houses. For the simpler houses, the process is usually shorter because certain documents already exist ("model houses"). There could be some potential for savings here - provided that not everything has already been individually determined. Perhaps you could, so to speak, align yourselves with their in-house "economical construction standard" and thereby be for them "Family Wunschlos" whom they are happy to "take along." That would be, so to speak, "the last resort" after the suggestion from did not really bear fruit. But a flat 25% - that's quite steep! Assuming construction costs of 350,000 EUR, that would be 87,500 EUR additional costs, leading to 437,500 EUR construction costs! But that everything is becoming more expensive is true - unfortunately.

The flat 10% contractual penalty is unlikely to hold up in court, but of course you will have to pay for services already rendered (surveying, architect, ...).

That includes the lost profit. In court, it could get even more expensive; I think 10% is rather fair.

But a flat 25% - that is pretty steep! Assuming construction costs of 350,000 EUR, that would be 87,500 EUR in additional costs, leading to 437,500 EUR in construction costs! But that everything is becoming more expensive is true - unfortunately.

Well, the construction manager said that for now. That doesn't matter at the moment. Wait for something in writing, then no "flattering letter" but a conversation on equal footing about what else can be done. This should include some willingness to compromise and, if necessary, elimination of scope of services to reach the planned 10% (or wherever the pain threshold may lie).

That includes the lost profit. In court it can get even more expensive, I find 10% rather fair.

I once googled what might come our way in case we don't get the land for some reason (we had a commitment, but the notary appointment was only after development). I recall that such flat penalties were listed among invalid clauses. However, I believe there is also the catch regarding the damage incurred; no more than the damage incurred may be demanded. But to be safe, a lawyer should clarify that ;)

In the current case, withdrawal according to §313 Building Code seems more reasonable to me than a "normal termination". A 25% price increase is definitely a significant change.

I would first write the "slimy letter."

Not leave anything in writing without a lawyer.

The positive thing is, there is a loan that still has the old favorable interest rates. If one were to take out a new loan now, the additional costs due to interest alone over 30 years or so would be that expensive. The most important question is therefore: Should a house still be built? Can one still afford it? How large is the financial buffer? How much may possibly need to be refinanced? Perhaps build smaller? What is the maximum price increase before the project is canceled? Once all these thoughts are sorted out, a strategy for negotiations with the [GU] can be considered. Before the negotiation and before a "slick letter," it must be clear: Build anyway somehow, or get out of the contract as cost-effectively as possible.