Construction contract - Uncertainty regarding payment schedule

Hello everyone,

I'm digging up this thread - didn't want to create a new one. We are currently in contract negotiations with a general contractor. It concerns the renovation and extension of an existing semi-detached house (built in '55). We bought the property with the house last year, and now it should be renovated and expanded. The architect has created all the specifications, covering all trades. Naturally, quite a lot of costs add up - especially in the Rhine-Main area. Now, according to the payment schedule, the general contractor wants 35% (!) as the first installment upon signing the contract - and that applies to all trades, even though things like flooring and painting naturally come at the end. I find that quite high; how do you see it?

Thanks in advance for your assessments - and sorry for 'hijacking' this thread!

Carsten

hello,

comparable to new construction, not unusual. See also the payment schedule according to the Real Estate Agent and Property Developer Ordinance. If payment was strictly based on progress, you would have to contract each trade separately. But that is more stressful.



Construction progress Share in % (according to Real Estate Agent and Property Developer Ordinance)
1. Building plot after start of earthworks 30 % of the total amount
2. Completion of shell including carpentry work 40 % of the remaining amount
3. Roof surfaces, gutters 8 % of the remaining amount
4. Rough installation of heating systems 3 % of the remaining amount
5. Rough installation of sanitary systems 3 % of the remaining amount
6. Rough installation of electrical systems 3 % of the remaining amount
7. Windows with glazing 10 % of the remaining amount
8. Interior plaster without auxiliary plastering 6 % of the remaining amount
9. Screed 3 % of the remaining amount
10. Tiling works in the sanitary area 4 % of the remaining amount
11. After ready for occupancy (completely finished inside) 12 % of the remaining amount
12. Facade works 3 % of the remaining amount
13. After complete completion 5 % of the remaining amount

It is about renovation and extension of an existing semi-detached house (built in 1955). We bought the property with the house last year, and now it is to be renovated and expanded. The architect has prepared all the specifications, including all trades ... Now the general contractor wants 35% (!) as the first installment upon contract signing according to the payment schedule - and this applies to all trades,

Is the architect part of the general contractor and therefore part of the general contractor’s billing to you, or is he paid separately by you?

Either way, this amount of advance payment is not acceptable, since the general contractor does not deliver the property. If the architect is part of the general contractor’s offer, then quite certainly the sales, architect, structural engineering, and surveying costs are being compensated – and that before they have even been incurred. If the architect is paid separately, the general contractor is securing himself and thus counteracting the risk of withholding advance payments (but is not aware of the latest legal changes, otherwise he would refrain from doing so as it is not necessary).

Architect, structural engineer and everything that belongs to it (surveying and soil report) are all handled separately, and have already been paid for to a large extent - with the architect according to the service phase. We have already had an intensive discussion with the general contractor because of this. I only came across the new Building Code sections (§650m etc.) afterwards....

It also bothers me quite a bit - especially when construction does not continue promptly after the 35% payment (from the general contractor's perspective, the whole house then still has to be built for only 65% of the compensation...)

What do you mean by the latest legal changes? That would be interesting, then I could also point that out to him...

Thank you very much!!