House contract signed

Hello Madonna,

Stop now – red does not suit me

My advisor told me on the phone a week ago that the contract becomes valid once an architect appointment has been requested.

The contract is legally binding once a legally binding order confirmation from Okal Haus has been received by you within the specified deadline – the architect meeting is not relevant for the deadlines for accepting contracts.

So does that mean I have the possibility to cancel until 13.12.2010 and that after this date a valid contract comes into existence?

NO. You can only cancel if the order confirmation for the contract (including all agreed services, such as the right of withdrawal) has not yet been provided, the statutory deadline has expired, and if nothing else has been agreed upon.

I thought that the date referred to the bank confirmation...

It means that, but it also means that you have committed yourself to use this timeframe for bank discussions; otherwise, according to all experience (small print):

that Okal Haus, if my bank has not yet been informed or does not issue a financing commitment, chooses a bank of their choice and forwards my data to obtain a loan

However, you cannot simply let the deadline pass inactive, believing that you can then cancel. THIS is not the case!

How and exactly what can I ask my advisor now to get a meaningful answer? His answer somehow sounded very non-committal... and I very awkward.

You should first check when you signed the construction contract, then check if and when you received the order confirmation. If more than 14 working days lie between (consider postal delivery times if applicable), you have, in my opinion, good chances to get out of the construction contract. If everything was processed properly (and I can hardly imagine that the good doctor lets the deadlines expire), you should promptly seek discussions with your preferred bank, because then you are already a builder.

The only thing that can still "save" you – always provided everything is correct – is a negative certificate from your preferred bank regarding your financing options or accommodation from Okal Haus, although the latter probably still has the option to arrange financing themselves (small print).

In any case, you should now promptly seek a conversation with a lawyer you trust! I cannot/may not provide legal advice to you; the area of concrete legal advice is assigned to lawyers in Germany.

Kind regards

THANK YOU THANK YOU THANK YOU.

You should first check when you signed the contract for work, then check if and when you received the order confirmation. If more than 14 working days have passed (possibly considering postal delivery), in my opinion you have good chances to get out of the contract for work.

I signed the contract on 14.11.2010 at a home exhibition. So far, I have not received any order confirmation.

The only thing that can still "save" you then – always assuming everything is correct – is a negative certificate from your preferred bank regarding your financing options or the accommodation from Okal Haus, whereby the latter would probably still have the option to arrange financing on their part (small print).

It is so that among other things, I signed to acquire the property soon. As mentioned, it still belongs to my mother, who intends to gift it to me soon. If my mother does not give it to me by this deadline, the financing would not come through either, because who gives me a loan approval (without property or equity)?

My parents do not yet know what I have gotten myself into, and I think they will tear my head off when they find out.

Many thanks again for the great advice, I would have gone crazy long ago.

Hi,

since the contract has not yet been confirmed by the client, you can try to terminate it according to $649 Baugesetzbuch:

"The client can terminate the contract at any time until the completion of the work. If the client terminates, the contractor is entitled to demand the agreed remuneration; however, he must offset what he saves in expenses as a result of the termination of the contract or what he earns or maliciously fails to earn by using his labor elsewhere. It is presumed that the contractor is entitled to 5 percent of the agreed remuneration attributable to the part of the work not yet performed."

That would mean, if nothing has been done yet, he is entitled to a maximum of 5% of the total amount, right??

I am reluctant to correct, but there is only a right of withdrawal for doorstep transactions.
No free withdrawal from prefabricated house construction contracts
Karlsruhe - A contract in which an entrepreneur commits to the construction of a shell house against installment payments is a contract for work and services. Consumers cannot withdraw from this contract either under the provisions on installment delivery contracts or as an installment payment transaction. The source Bausparkasse points to this decision of the Federal Court of Justice (ref. no. VII ZR 183/04). With its decision, the BGH overturned a ruling of the Higher Regional Court of Koblenz (ref. no. 8 U 106/04), which had referred to a 14-day withdrawal period for installment contracts.
In the case, it was agreed in the contract that five percent of the total price was to be paid upon ordering, 80 percent after a first construction phase, and the remaining 15 percent after handover of the house. After conclusion of the contract, however, the buyers had noticed that they should pay extra for some services – and withdrew from the purchase contract after one week. The house provider demanded 15 percent of the building sum as damages.
The BGH judges have now made clear that it was a "contract for work" and not an installment payment transaction. The BGH therefore saw no reason for a right of withdrawal, overturned the Koblenz ruling, and remanded the case to the OLG.
Source: “Die Welt” dated 08.04.2006

For Madonna, the bold text applies; which corporate consortium could have pushed this judgment through

The plaintiff, a construction company from the Hunsrück region, had concluded a contract for work and services with the defendants, who were consumers, concerning the delivery and erection of a shell house. The company's contractual terms provided that the company could demand a flat-rate compensation of 15% of the total price in the event of free termination of the contract by the builder, unless the builder proves that the damage incurred by the company was less than the 15% flat rate. Furthermore, the defendant builders were granted a right of withdrawal upon conclusion of the contract in the event that the financing of their construction project should fail.

Before construction began, the defendants declared their withdrawal from the contract. They had their house built by another contractor.

The plaintiff then demanded payment from the defendants of the contractually agreed flat-rate compensation of 15% of the construction price.

The decision
The Trier Regional Court had upheld the claim. The defendants' appeal was now dismissed by judgment of the Koblenz Higher Regional Court dated 27.08.2010 (File No. 8 U 1030/09).

The Koblenz Higher Regional Court came to the conclusion that the conditions under which the defendants could have exercised the right of withdrawal granted to them did not exist. Financing of the construction project was possible. The declaration of withdrawal must therefore be regarded as a free termination of the contract by the defendants.

In the case of this so-called free client termination according to Section 649 of the German Civil Code (BGB), the builder remains obliged to pay the agreed remuneration to the contractor. However, the contractor must offset what was saved by the premature termination of the contract, what he acquired elsewhere, or maliciously omitted to acquire.

This claim to remuneration may be standardized in general terms and conditions. To meet the legal requirements for general terms and conditions, the contractual clause must, among other things, indicate that the builder is permitted to prove that no damage or claim within the meaning of Section 649 BGB has actually occurred.

The Koblenz Higher Regional Court held the view that the reference to the possibility of proving damages less than the flat rate meets these requirements. A "lesser damage" also includes one of "zero".

According to the Koblenz Higher Regional Court’s decision, the flat rate of 15% of the total price is not unreasonable in terms of its amount. Viewed from the required typifying perspective, the flat rate does not unreasonably deviate from what the contractor could claim under the statutory remuneration claim pursuant to Section 649 BGB in the event of termination by the builder. This includes, in addition to the personnel and material costs already incurred by the contractor related to the contract, also the calculated profit.

Since the higher court case law in this matter is not uniform, the Koblenz Higher Regional Court has allowed revision to the Federal Court of Justice (BGH).

Conclusion: The possibility opened to the builder by law to terminate an concluded construction contract at any time may be particularly tempting in cases where realization of the construction project with another company promises financial advantages. However, the consequences of exercising the right of termination can be severe and consume the expected financial advantage or turn it into financial disadvantages.

Assuming I claim that I currently do not want to build after all, because I am not so sure about my financial situation and want to wait before I take on debt (I am 25 years old).

Hello Madonna

This is definitely not enough...

Although I do not know the exact wording of the agreement... but if it is something like... "the contract becomes valid upon presentation of a bank commitment.. or the financing capability.... the customer has a free right of withdrawal until 31.12..." then it is quite possible to achieve a contract termination here (if the company does not confirm this to you within the already mentioned 14 days, then you are lucky and reject a late contract confirmation..) ...Otherwise you should:

Immediately talk to your mother, clarify the situation... She will surely confirm to you that you will not get the plot of land...
You have to go to the house bank, she must (she certainly will, if she later wants to finance the building project..) briefly confirm to you in writing that home financing is not possible! How should this be otherwise, since you do not have a building plot.. this is rather internal to the bank.. but officially outward.

You send this bank letter as an attachment to the contract cancellation, referring to the free right of withdrawal, to the company and ask for confirmation of the contract termination. That should work exactly like this.

But as mentioned, I do not know the exact original text.. but most companies just use the above texts to fish customers from the market... which has worked excellently for you.