General contractor payment plan, assessment/payment plan/regulation

Hello everyone,

we would work with a general contractor. We are buying the land directly from the owner and then building with the general contractor. He proposes the following payment plan based on the real estate agent and developer ordinance (the contract only comes into effect with the building permit or an existing development plan):

1. Payment installment before planning 9%
2. Payment installment after demolition/clearing 5%
3. Payment installment after setting up the construction site and completion of earthworks 11%
4. Payment installment after completion of the foundation slab 7%
5. Payment installment after completion of the basement ceiling 6%
6. Payment installment after completion of the ground floor ceiling 6%
7. Payment installment after completion of the upper floor ceiling 6%
8. Payment installment after completion of the shell construction 9%
9. Payment installment after completion of carpentry work 3%
10. Payment installment after completion of roofing work 3%
11. Payment installment after installation of the windows 8%
12. Payment installment after completion of rough installation 7%
13. Payment installment after completion of interior plastering 9.5%
14. Payment installment after completion of screed 7%
15. Payment installment after acceptance, rectification of residual defects, and readiness for occupancy 3.5%

What do you think?

We were concerned because after the screed not much is left open, but sanitary, doors, tiles, etc. are still missing.
The general contractor explained to us that we never have to make advance payments.
The costs for electrical work, heating work, sanitary installations, interior stairs, doors, access paths, and tiles are included in payments 12–14. The exterior plaster is included in the interior plaster work at point 13.
The payment plan can never cover all trades, so these are summarized in a maximum of 15 payments.
The last installment (15th payment 3.5% of the total sum) is only due after all defects have been remedied.

It sounds logical, but I am inexperienced and somehow still suspicious. Thanks for the feedback.

Hello Alicante,

Unfortunately, I have to agree with Micha. The payment plan is very unfavorable for you! If I remember correctly, Bauexperte has already written about this topic here in the forum a few times. And the consistent statement was that the sealed shell structure (that is, with roof and windows) should not cost more than about 50-60%. But if I add up your payments up to the 11th installment, I already get 73% – that is definitely too much!! Maybe Bauexperte will also write something about this.

By the way, I also find it strange that you are supposed to pay 9% BEFORE the planning is completed... usually the first installment is only agreed upon AFTER the planning is finished.

By the way: if the general contractor (GU) follows the real estate agent and project developer ordinance, this is somewhat borderline in your case: when you buy from a project developer, you buy the land and house as one sum from the "same company/person". Therefore, in this payment plan the initial rates are somewhat higher – since a certain part of the agreed purchase price is also for the land. But you are already paying for the land independently of the GU beforehand to the owner.

Be sure to get independent advice! And if the GU does not want to significantly deviate from the proposed payment plan (and he would have to, so it is fair for both sides), you should not sign with this GU!

Oh, and what is fundamentally very important – Micha already wrote this too – only what you have AGREED IN WRITING applies! This applies not only to the payment plan but also to deviating agreements from the building description or special requests or anyway for everything that is missing in the building description!!!

Wishing you continued success!!
Best regards,
Goldbeere

Hello,

Unfortunately, you are very sparse with information.

He proposes the following payment plan based on the Real Estate Agent and Property Developer Ordinance (contract only comes into effect with building permit or existing development plan):

That is - with all due respect - nonsense! The Real Estate Agent and Property Developer Ordinance usually does not provide for more than 7 installment payments; usually mostly 5. This is because, as "Goldbeere" correctly formulated, in a property developer deal the house and land are purchased from the same source; so a large chunk for the land must be paid upfront.

1. Installment before planning 9 %

There are some situations where an advance payment makes sense. However, in most contracts for work, they are just a means to an end for the provider. I always point out that in such cases payment should only be made once services have been rendered.

2. Installment after demolition / clearing 5 %

What does that mean? Does an old building need to be removed or are there many bushes/trees on the property?

3. Installment after setting up the construction site and completion of earthworks 11 %
4. Installment after completion of the foundation slab 7 %
5. Installment after completion of basement ceiling 6 %
6. Installment after completion of ground floor ceiling 6 %
7. Installment after completion of upper floor ceiling 6 %
8. Installment after completion of shell construction 9 %
9. Installment after completion of carpentry work 3 %
10. Installment after completion of roofing work 3 %
11. Installment after installation of windows 8 %

By this point, you would have already paid 73% of the contract sum. What happens if you have to terminate the contract for work - for whatever reason? With the remaining 27%, you will never be able to manage the interior finishing!

For contracts for work, at the stage of a closed shell building - masonry, carpentry + roofing as well as the window trade including front door - no more than 60% of the contract sum should be paid; preferably 1-2% less.

The general contractor told us that we never have to pay in advance.

The amount in the bottom right must be very tempting for you to even consider this payment plan.

This is what a mutually fair payment plan looks roughly like:

06% - after submission of building application
06% - upon issuance of building permit
10% - after completion of basement floor/foundation slab
10% - after completion of ground floor walls
10% - after completion of ground floor ceiling
05% - after setting up the roof truss
05% - after roofing
05% - after installation of windows/glass
--------
57% after closed shell building

10% - after rough installation of electrical, plumbing, heating
07% - after interior plastering
10% - after application of exterior plaster or cladding
10% - after fine installation of electrical and heating, stairs
04% - after installation of tiles, interior doors
02% - after handover or acceptance, at the latest before the client uses the building

The payment plan can never include all trades, therefore these are combined into a maximum of 15 payments.
The last installment (15th payment 3.5% of the total sum) is only due after all defects have been remedied.

That is correct; but it can still be largely fair for both parties! The consumer advice center would even prefer 20 or more payment steps - but then the question of meaningfulness arises again, because at certain times during construction builders could then end up spending the night at their financing bank.

Best regards from the Rhineland

May I join in with the same question here?

We have received the following payment plan:

"Preliminary and general costs 14 days after order confirmation" (for turnkey house on own land) 5%

30% after completion of basement ceiling (excavation is own work!)
30% after erection of roof truss
22% after completion of rough installation and windows
10% after screed and interior plaster
3% 3 days after completion, at the latest on handover and invoicing.

Any opinions on this?