Partial payments specified in the construction contract can be changed.

Hello,

Actually, I thought we had finally found a "serious" general contractor for our construction project. Now I have studied the construction contract more closely and am somewhat surprised by some passages.

In general, one signs that nothing, absolutely nothing, entitles one to reduce or withhold progress payments.

Furthermore, the progress payments (in my opinion) are higher here than according to the Broker and Developer Ordinance (I thought the highest progress payment rates were regulated there).

May I submit the progress payments here and would someone say, okay, this is acceptable or no, better to avoid?

Thank you
Hilaria

Hello,

In general, it is agreed that nothing, absolutely nothing, justifies reducing or withholding interim payments.

Contract according to VOB?

Am I allowed to stop the interim payments here and would anyone say, okay, you can go ahead or no, better not?

Of course you can do that

Kind regards

Hello construction expert,
so the warranty is according to the Building Code, otherwise there is nothing stating what the contract is based on.

I will write the due dates here:

5% upon handing over the building application documents to the client
20% completion of the basement ceiling
10% completion of the ground floor ceiling
10% completion of the upper floor ceiling
10% roof covering
10% window installation
10% rough installation
10% interior plaster
10% screed and tiling work
3% house and interior doors
2% acceptance

What I also find missing and suspicious in the contract are points like:

1.) Securing insolvency or completion guarantee / warranty guarantee - not a word about it

2.) Completion guarantee is stated as follows: from the placement of the base slab 8 months + delays that are not the fault of the construction company,
force majeure, strike, bad weather, delayed own services, unjustified payment default...

3.) Penalty in the form of claims for damages by the
client according to the Civil Code - what does that mean in plain language, I have already searched stupidly and extensively?

General assessment, is this acceptable or not?

Hello,

so the warranty is according to the Building Code, otherwise there is nothing stating what the contract is based on.

Better

5% upon handover of the building application documents to the client

That’s ok, maybe your seller also takes the building application to the building authority...

20% completion of basement ceiling
10% completion of ground floor ceiling
10% completion of upper floor ceiling
10% roof covering
10% window installation

That makes 65% for the enclosed shell without exterior plaster; unacceptable. In the worst case, you won't get the construction finished with the remaining 35%.

[...]

What I also miss and find suspicious in the contract are points like:
1.) Security for insolvency or completion guarantee / warranty guarantee - not a word about it

Unfortunately, there is no legal obligation for this; however, you can clearly tell from that which providers are worth dealing with.

2.) Completion guarantee stated as: 8 months from the laying of the base slab + delays not attributable to the construction company, force majeure, strike, bad weather, delayed own contributions, unjustified payment default...

This wording is completely fine – sellers may be able to influence many things, but not force majeure or weather – with this wording, the legislator has backed the general contractor/construction company/builder.

3.) Contractual penalty in the form of claims for damages by the client according to the civil code – what does that mean in clear terms, I’ve already searched myself silly? General assessment, is that acceptable or not?

Book 2 – Law of obligations (§§ 241 - 853), Section 1 – Content of obligations (§§ 241 - 304), Title 1 – Obligation to perform (§§ 241 - 292)

Basically, a contract according to the Building Code is always recommended; if concluded according to the VOB you cannot make reductions, let alone refuse acceptance – even in justified cases. With a contract based on the Building Code, you can terminate at any time, and you can deduct up to twice the value of any existing defects from the next partial payment. Logically, only until the defect is remedied.

However, if you sign the statement: "Generally, one signs that nothing, absolutely nothing entitles you to reduce or withhold partial payments", you override the legal provisions with your signature.

Best regards

Thank you, construction expert, so my impression was not entirely wrong ...

Well, the question is only, where can I find a better provider, the way here was already very difficult.

However, we will state that we do not agree with the contract as it is, let's see how the company reacts.

One more question: shouldn't the advance payments be based on the [Makler- und Bauträgerverordnung], weren't there various rulings that led to payment plans being voided or is that a "Kannbestimmung"?

Regards
Hilaria

Hello,

Well, the question is only, where can I find a better provider, the way here was already very difficult.

Collateral damage unfortunately also occurs when searching for the right construction partner; don’t let it get you down!

I have found that smaller, local construction companies are always the better choice. In your area in Bavaria, there are surely plenty of them

One more question: don’t the installment payments have to comply with the Broker and Developer Ordinance, weren’t there various court rulings that led to payment plans being void or is that optional?

The Broker and Developer Ordinance is - as the name suggests - mandatory *only* for developers. Due to the numerous court rulings, it will - hopefully - not take long until the Federal Court of Justice issues a binding recommendation for legislative change to the government.

Court rulings are always *only* one of many instruments and not necessarily binding for other competitors. Try your luck, maybe your favored construction company will change its payment plan; by the way, I would be interested in the BB ... usually there are causal connections to be found there.

As a rule of thumb: if the installment payments exceed 55 - 58% for a closed shell construction - shell, carpenter, roofer, window installer - stay away; even if a down payment is requested. Payments should always be made after completion of the respective work!

Good luck!