Construction contract, building permit, soil report

Hello everyone,

after a long search, I have found a plot of land and reserved it.

I have been in contact with Town & Country for some time and have already had a friend who is an architect look over the construction contract, which he liked because everything is really detailed, and in the conversation with the Town & Country salesperson, all possible costs were discussed and calculated.

On this side, I feel quite well taken care of.

The plot has not yet been purchased, but I am supposed to sign the construction contract now, which also includes the classic clauses for withdrawal. It's good that this forum exists because I suspect that I should not sign anything before buying the plot, right?

What would be the best course of action since some things cost money that need to be clarified in advance and are included in the Town & Country services like the soil survey and building permit application?

I can only apply for the building permit after I have purchased the plot, right? Then the logical steps would be:

Have the soil survey done (I have to pay initially)
Buy the plot
Apply for the building permit (I have to pay for the architect’s services initially, but maybe the Town & Country architect could do it and later have it credited?)
Sign the construction contract after the building permit has been granted

Has anyone done this with Town & Country before and how did it go?

What do I do if Town & Country does not agree to this (they mediated the plot for me, I’m not sure how much influence they have on the realtor to not sell it to me)?

Thank you very much
insgruene

Hello,

Good that this forum exists, because I suspect I shouldn't sign anything before buying the property, right?

It depends, basically it is always advisable to put one foot in front of the other. However, if the “classic” rights of withdrawal – as you call them – deserve their name, meaning they really grant you a withdrawal, and specifically a withdrawal with clearly and thoroughly stated costs for the worst case – then there is no objection to signing the contract for work.

Why can't the property be acquired yet?

Kind regards

Hello construction expert,

the plot can already be purchased, I have reserved it and will be at the bank next week to apply for financing. It then takes about a week until approval and then we can go to the notary.

I am just not quite sure if the house builder, who has a good relationship with the broker, might make sure that it is not sold to me if I become stubborn.

Here are the "classic" withdrawal clauses, which already apply if I do not yet have a soil report and no building permit:

The client is entitled to withdraw from the construction contract if he does not acquire or select a plot within 6 months after the contract is concluded. The client is free to withdraw even after this period has expired, provided that the contractor has not yet submitted a building application or commissioned the necessary planning services or a soil report at this time.
If the client has not acquired or selected a plot within 3 months after the contract is concluded, the contractor is entitled to provide the client with plots (right of tender). In the event of withdrawal, the client undertakes not to develop any of the plots shown and rejected by him within 2 years after exercising the right of withdrawal. If the client violates this obligation by developing a rejected plot within the aforementioned period, the client shall pay the contractor a lump sum of 10% of the fixed price agreed at the time of withdrawal.
If the client withdraws at a time when the construction financing has already been approved by a bank or savings bank and he has decided on a plot, even without purchasing it, the client is also obliged to pay a lump sum of 10% of the fixed price agreed at the time of withdrawal.

And that’s where my bad feeling starts. What if something negative comes up in the soil report, or no building permit is granted? Although it is relatively unlikely, you never know.

The problem is that there will be enough people who will sign this clause or have already done so. It is easy for the broker to find someone else.

Best regards
insgruene

Hello,

first of all – I am not allowed to provide legal advice, as this is reserved solely for licensed lawyers in Germany.

the property can already be acquired, I have reserved it and will be at the bank next week to apply for financing. It will then take about a week until approval and then we can go to the notary.

I would not sign the wording regarding the right of withdrawal of the provider as it is, in my opinion, not legally compliant with the 10% flat rate (penalty payment). The contractor can charge you for their _actual_ expenses, but no more than that, if you purchase a previously rejected property – provided they have performed services. But I even doubt that, as the contractor does not act as a broker at the same time and the broker’s commission remains with the broker anyway.

I am just not quite sure if the house builder, who has a good relationship with the broker, might ensure that it is not sold to me if I become uncooperative

Do you really consider this gut feeling a good basis for cooperation?

And that’s where my bad gut feeling starts. What if something negative comes up in the soil report, or a building permit is not granted? Although it is relatively unlikely, you never know.

The costs resulting from any findings of a soil report are not covered by the fixed price by any provider; however, you should have been informed in preliminary talks about the possible costs in the worst case. This item is part of the ancillary construction costs amounting to around EUR 30,000 for largely normal soil conditions. If, for example, a high groundwater level or clay soil is found, the costs for earthworks can easily be in the range of EUR 10,000-15,000 higher and thus increase the ancillary construction costs accordingly. If your seller has failed to mention this, I would reconsider cooperating.

The problem is just that there will be enough people who will sign this clause or have already done so. It is easy for the broker to find someone else.

I have taught my children from a young age not to jump off a bridge just because someone else does!

If you do not feel comfortable with the current situation, you should refrain from purchasing. Many more properties will come on the market …

Kind regards

Hello construction expert,

thank you very much! The worst case that the property might not be sold to me is mainly my catastrophic thinking, my architect, who also knows the house seller, has rather a good impression.

And so far we have been able to speak very openly and the seller thinks that he would rather calculate all costs in advance to avoid a nasty surprise later, which I find very good and was also confirmed by my architect after looking at the cost breakdown.

Another buyer, for example, has already had the soil survey carried out before the notary appointment and then gets it credited.

I just have a problem with these clauses, otherwise my gut feeling is good.

I will now discuss this with the seller and request the adjustment of the clauses. I want a right of withdrawal with compensation for expenses after a negative soil survey or if the building permit is not granted or altered. I also want the floor plans according to my wishes included in the contract beforehand, at the moment the sample floor plan is included + architectural services for floor plan changes. And the reference prices for the equipment should also be included. Additionally, there are changed installment payments, which also don’t quite fit (e.g. 70% after shell construction including windows, it should be 60%).

I hope that’s not too much to ask? If that is not possible, I probably won’t sign a contract in advance but will first purchase the property and then renegotiate.

Best regards
insgruene

Hello,

There are also changed installment payments, which do not quite fit either (e.g. 70% after the shell including windows, it should be 60%)

The rest before that has _for me_ a certain smell, BUT

"70%" after the shell should also be out of the question for you, your gut should strongly protest

Kind regards