Is a completion bond necessary for the completion of construction?

Hello,
we are starting construction next week. It is a smaller to medium-sized regional contractor.

Now I am wondering if I should have some kind of guarantee for completion? (That’s what big home builders advertise.)

Or is that nonsense?
I have full trust in the company, payment will be made according to construction progress.

Actually, I only know this from
my father’s house construction. He built with a freelance architect 5 years ago, and received such a guarantee from the trades to ensure the 5-year warranty was definitely secured.

Thanks to you for the clarification

What should such a guarantee look like?

A DINA4 sheet with a photo of the boss???

Anything that is not a bank guarantee from the developer regarding any defects in monetary value is worthless.

And you will not get such a guarantee; rather, the company will demand it from you.

this type of guarantee already exists, I mean the Town & Country parent company offers it. For small medium-sized businesses, the guarantee is rather uncommon, as there is no franchisee going bankrupt for whom the parent company then steps in.

In the medium-sized sector, bankruptcy means bankruptcy, which is why the legislator tried to minimize the risk and prescribed the payment plan and prohibited advance payment.

In our case, it was stated in the notary contract that if the building type does not have a guarantee account, we can withhold 5% from the first installment. We did that as well. He then received it with the second to last installment because everything went perfectly. Our neighbors did not do that, with the reasoning: small village, local bricklayer, personally known, he works properly... which he does. But I don’t rely on that with such amounts.

Before it is clarified whether a performance bond or warranty bond (from acceptance), is meant/wished for, a precise answer is not possible.

If it is not a "first demand guarantee," it remains a paper tiger anyway, since otherwise the guarantor will not pay without acknowledgment or a legally binding judgment on the "existence" of a (disputed) defect; after all, he still wants to assert recourse claims against the contractor in the internal relationship....

Retentions are much more practical. Only in the event of insolvency is a guarantee "valuable."

O.k I am not familiar with that. Thanks first. So it is not common. 5% may be withheld if not everything was done properly? So withhold or reduce the final payment?