House construction company/legal required changes to the building contract

Dear forum members,

the following problem has arisen: I am currently in fairly advanced negotiations with a prefabricated house company (the one with the red letters), and everything had made a very good and solid impression so far. Nevertheless, I had the construction contract checked by an experienced construction lawyer as a precaution. This revealed lots of proposed changes and notes about wordings in the contract that are disadvantageous for me as a customer. When I brought up this topic, the house seller's comment was, "that the submitted contract has been in place for 18 years and there have never been any problems." Furthermore, it was said that people who insisted on changes to this contract had already been turned away. They made it more or less clear to me that changes to the contract would not be implemented.

So far, I was more than satisfied with the course of the negotiations, the information provided, and the availability of the house seller. Now, however, I am very unsettled and do not know whether I should really build with this company.

What are your experiences with house building companies regarding legal reviews of contracts and the corresponding reactions of the companies? Were contracts changed as requested, or do all companies remain stubborn?

Many thanks in advance and best regards

Susannchen

From an economic perspective, I would say.. every change also means audit effort on the part of the company. Are these critical points?

After all, you now know about the weaknesses and disadvantages of the contract.

Either you are willing to accept these disadvantages at the corresponding price... or not.

The provider is not obliged to build you a house. Sounds harsh, but that's how it is.

Dear forum members,

When I brought up this topic, the house seller's comment was, "that the presented contract has existed for 18 years and there have never been any problems." Furthermore, it was said that people who insisted on changes to this contract have already been turned away.

Susannchen

If there were never any problems, why do customers have to be turned away? Apparently, you are not the first to question the contracts critically. If there were no criticisms of the contracts, customers insisting on changes would not have to be turned away. So what is it? Either/or. To me, this already sounds somewhat questionable. But maybe I am just a bit too cautious.

It is already good that you had the contract reviewed. We did not sign with a university of applied sciences provider 2 years ago, among other reasons, because the contract was bad and are now very glad about it. Can only recommend taking enough time. Like when getting married. The sellers also use all the tricks, of course "there have never been any problems."

Hard to say for me, I will give some examples:

The lawyer criticizes, for example, that the (not yet granted) building permit is explicitly used as the contractual basis. This probably means that in the event of the building permit not being granted, I have to bear the risk and also the costs. According to the lawyer, however, this risk should not be borne by me but by the contractor, so that I would be granted a right of withdrawal from the contract without expensive consequences if the building permit is not granted. She then provided a very detailed proposed wording. It reads as follows:

"If the building permit based on this contract, the associated construction and performance description, construction drawings, plans, the other annexes to the contract as well as the other documents is not granted by … or is only granted under unreasonable conditions, the client is entitled to withdraw from this contract.

In the event of a withdrawal according to the preceding provisions, the contractor hereby waives the assertion of claims for remuneration, reimbursement of expenses, damages and other claims. The client accepts this waiver.

However, in this case the contractor shall indemnify the client for all damages and other expenses resulting from the conclusion of this contract or also the financing of the remuneration; the client will thus be placed overall in the same position as if this contract had never been concluded."


Furthermore, a clause regarding the fixed price should be included, which according to the contract applies for one year. If the construction period goes beyond this, otherwise I bear the higher costs.

This is how it is formulated in the contract:

2. The contractor is bound to the lump sum price stated in no. 1) for the duration of 12 months from the signing of the contract. Delays for which the contractor is responsible shall be disregarded when calculating the duration of the price binding period. If the client does not comply with their necessary cooperation actions within the price binding period, the rights and claims of the contractor shall be determined according to §§ 642, 643, 645 of the German Civil Code.

And this is what the lawyer explains about it:

"The agreement of a fixed price is common and also important from the consumer’s point of view when building terraced houses, prefabricated buildings, etc.

However, it contradicts your legitimate interests as a consumer that your contractual partner only wants to be bound to the agreed price for a limited period according to § 2 clause 2. It is already completely unclear what must happen within this period so that the lump sum price cannot be increased, whether it is sufficient, for example, that you carry out the – here not further defined – ‘necessary cooperation actions’ within this period to avoid a price increase, or whether, for example, it is required for the validity of the fixed price that the construction project is completed within this period. In any case, according to the wording of this provision, delays for which you are not responsible and which are beyond your sphere of influence could result in your detriment and lead to an increase in the fixed price. This is naturally not acceptable from a consumer’s perspective.

Regardless, it poses a massive risk for you if the contractual partner can unilaterally increase the remuneration after the deadline and to an extent that you cannot calculate, while you remain bound to the contract unchanged. You should basically not accept this risk! This is even more problematic if you are not yet registered as the owner of the building plot in the land register, because this is usually a prerequisite for the start of construction.

The fixed price regulation as an upper limit should therefore absolutely apply! Insist that § 2 clause 2 be replaced by the following wording:


The lump sum price stated in this contract is a fixed price that the contractor guarantees unconditionally and indefinitely."


And so there are numerous points that should/must be adjusted.

If someone has the time and inclination, I can gladly provide the further points here.

I would like to thank you already very much for your time and effort.

Best regards

Susannchen