Is a high first installment common in a payment plan?

Hello,

I am now also capable like many others here. I currently have a contract for a custom-built home to sign. I believe that as the client I am taking an unnecessarily high risk by signing it.

It concerns the following:
The first installment in the payment plan "Submission of the building application documents" is set at 7% of the total amount. At the same time, the contract states that I can withhold 5% of the contract sum if the contractor cannot provide me with a guarantee by the time the first installment is invoiced.

Practically, this probably means that I will only pay 2% for the first installment and keep the rest as security (I do not expect the guarantee to be provided).

The question for me is:
1. Is 7% for submitting the building documents reasonable and usual?
2. Some further installments are due at the start. They range between 5% and 10%. In a worst-case scenario (contractor insolvency), the withheld 5% from the first installment will never cover this. What do you think about this?

Thanks in advance for tips.

The question is always whether the contractor will agree to changes. If he does not, you have two options: 1. you find someone else or 2. you swallow the bitter pill and play by his rules

7% of what? The first installment refers to the production of all construction documents including the building application, house planning, structural analysis... Therefore, 7% does not have to be too high. Normally, about 5% is assumed. The construction company pays in advance. When invoicing the first installment, the building application should therefore have been submitted.

Best regards, Yvonne

Thank you for the answers. The 7% refer to a total amount of €220,000 (house without land).

Hello,

can you please post the complete payment plan in % here.

Then one can get a better picture.

Where you signed the contract, and cannot negotiate anything afterwards

The payment schedule is as follows: 7% Submission of building application documents 5% Start of construction work 15% Completion of foundation slab 15% Completion of ceiling above ground floor 10% Completion of roof framework or carpentry work and ceiling above upper floor 10% Completion of rough heating installation and sanitary installation 10% Start of window installation 8% Completion of electrical installation 5% Start of interior plastering 5% Completion of screed 5% Start of tiling 5% Completion of agreed services and acceptance

What do you think?