Is the construction time specified in the prefabricated house contract binding?

Good day,
we concluded a work contract at the beginning of the year, after one or two setbacks also found a property that we really like, waived the right of withdrawal and it can start. Now we have received a letter with a rough schedule: completion August 2023... 25 months...
According to the contract, however, a construction period of 8 months from the receipt of the building application approval is stated. Of course, it can take quite a long time until the approval comes (especially if the architect responsible for preparing the building application is also from the prefabricated house provider), but 17 months seems somewhat unrealistic to me.
According to the advisor, the delay is due to a high volume of contracts (one might suspect that the provider with the fixed price guarantee we have wants to gamble that building materials will become cheaper again and is therefore delaying).
To what extent is the provider bound by the indication of the construction time in the contract?

In principle, we could live with the delay, even if it is really unpleasant. However, we are getting major concerns due to the following circumstance:

According to the building contract, the first part of the money (10%) is also due upon receipt of the approved building application. That means, at this point the loan must also be concluded. Who is then responsible for the payment of the commitment interest after one year if the construction is still delayed by more than a year from this point, even though a construction period of 8 months is stated in the contract?

Thanks in advance

To what extent is the provider bound by specifying the construction period in the contract?

Contract? Legally binding? What kind of contractual penalties are there?

According to the construction contract, the first part of the money (10%) is also due upon receipt of the approved building application.

That is okay as well.

That means the loan must also be finalized at this time.

Why? Some need the loan earlier since the land is also (partly) paid from the loan. Or later if the equity is sufficient for the start of construction.

Who is then responsible for paying the commitment interest after one year if the construction is delayed by more than a year from this point, although the contract specifies a construction period of 8 months?

First of all, you are. It is not the construction company's problem when and how you finance. However, there are contractual penalties if the construction is not completed as agreed. Normally, the penalty should be high enough to hurt the company and allow you to earn money from it (after deducting construction interest, rent payment, or whatever).

Contract? Legally binding? What kind of contractual penalties are there?

No contractual penalties are mentioned in this paragraph of the contract. Unfortunately, I do not have the contract on hand right now (because I’m at the office).

That’s okay too.

I also think it’s okay; I just wanted to explain the entire context.

Why? Some need the loan earlier since the land is (partly) paid for from the loan. Or later, if the equity is enough for the start of construction.

I was a bit inaccurate there. We need the loan at that point in time. With normal construction times, that wouldn’t be a problem at this stage either.

First of all, you. It’s not the construction company’s problem when and how you finance. However, there are contractual penalties if the construction is not completed as agreed. Normally, the contractual penalty should be high enough to hurt the company and for you to make money with it (after deducting construction interest, rent payments, or whatever).

Thank you very much for the hint. I will definitely go through the contract again to look for general contractual penalties.

Construction period interest is simply double burden. Everyone has that.

No contractual penalties are mentioned in this paragraph of the contract.

As a seller, I would not have included them in the contract either.

Without a contractual penalty, a construction completion deadline is a toothless tiger.

No contractual penalties are mentioned in this paragraph of the contract. Unfortunately, I do not have the contract at hand right now (because I am at the office).

In the end, it does not matter. It is easier with a concrete contractual penalty.

Otherwise, § 286 of the Building Code applies (no legal advice!). The company falls into default and becomes liable for damages. Of course, everything must then also be reported correctly by you.
Then they must pay, for example, the following items (I copied this from the internet because I find the list helpful):

[*]The rental costs for the previous apartment incurred during the delay period,
[*]any additional travel costs resulting from the fact that the move could not yet take place,
[*]any hotel accommodation costs or interim storage costs for the furniture if the buyer or builder has terminated or sold their previous apartment in reliance on meeting the completion date and must vacate the previous apartment by the agreed completion date,
[*]financing costs, such as commitment interest, because the last payment installments could not be drawn from the lender due to lack of completion. In addition, as damages, interest on the already drawn loan capital must be applied for the duration of the delay. Basically, the repayment phase of an annuity loan only begins with the full disbursement of the loan amount, so the repayment period is usually extended by the duration of the delayed completion of the construction project,
[*]reimbursable may also be lawyer fees if the buyer or builder hires a lawyer after the builder or general contractor defaults,
[*]finally, the buyer can also claim compensation for loss of use for the apartment not made available on time. However, it should be noted that this compensation for loss of use is naturally to be credited against any concretely claimed rental damage for the continued rental of the previous apartment. Therefore, no cumulative damage claims are allowed.

Whether a set-off with the remaining or final payment installment is possible can be better assessed by a lawyer.