Is the general contractor payment plan acceptable? Thanks for tips

I think it is generally hard to say because every contractor reacts differently here. Most probably cannot keep up with orders and therefore tend to assert their interests. For the contractor, a lot of money at the beginning is also better than the other way around, as this way they do not have to make advance payments and minimize their risk.

If it doesn’t suit you, I would definitely address it politely and ask if the division could be adjusted a bit. It’s best to come directly with a proposal from your side. However, it should be realistic and not favor you.

Our general contractor is relatively open within certain limits. We received a draft of the contract including the payment schedule from our general contractor with a request for review. He had said right away that this was now his standard and a proposal and that we could definitely discuss it. We haven’t had an appointment in the meantime but would take the adjusted version with us and then go through the points with him.

Had a consultation appointment with the lawyer now, who says that almost all payment plans he sees are front-loaded. They are usually signed anyway. In the end, it is also a give and take. If the GU provides a legally compliant payment plan, he himself also has more security, namely that the payment plan is effective and cannot be contested. A very helpful argument in payment plans can also be the bank. The bank only wants to release the money from the loan if a corresponding value has been created. If the payment plan does not adequately reflect the value development to the detriment of the bank (and the builder), it can refuse the disbursement – perhaps in parts.

I can simply report myself how my general contractor (GU) reacted. He sticks to his opinion that the payment schedule is OK as it is. Specifically, he wants to increase the final installment from the current 2.5% to 5% by combining the last two installments, each of which is 2.5%. According to the law, however, the final installment must be at least 10%. So far, he is not yielding on this. The next point is the security retention of 5%, which is supposed to ensure that the building is completed without defects and on time(!). The easiest way to implement this is to simply withhold 5% from the first installment, and if all goes well, these 5% would then be paid together with the final installment. Strictly according to the law, a total of 15% would therefore be withheld until the end. My GU does not want to accept this and would only do it via a guarantee (which costs money). In his opinion, the same guarantee would also fulfill the requirement that the final installment must be at least 10%. I do not believe that this is permissible and will specifically ask my consulting lawyer about this. In all of this, one should also be careful not to fall out with their GU. "Then just go to another GU," is easier said than done. In most cases, that sets you back by months (often equivalent to paying monthly rent). And you don't even know yet what kind of contract a potential new GU would present. Maybe it would be even worse! My lawyer is aware of this (finally someone who is realistic and doesn't only see things through lawyer’s glasses). He often sees contracts that are beyond good and evil. Currently, he is also in legal disputes with 3 major home builders (the usual names you know). They take little to no notice of that. In the end, the contract is signed as it is. And, this must also be said: The house gets built. People move in. All's well that ends well. Not always. But mostly. It does not necessarily have to end badly if the contract is not maximally consumer-friendly. How to deal with the fact that some points are effectively inadmissible is something you have to decide for yourself.