Payment Plan for Prefabricated House - Reviews and Experiences Desired

Hello everyone,

I have here the payment plan of a general contractor (GU) for review. I would like to present the payment plan to you with the request for comments.

10% after completion of building application documents
65% on the 2nd day of construction, completion of the building shell, windows, doors, roof covered
15% 4 weeks after start of construction, completion of screed, underfloor heating, heating and sanitary piping
10% after acceptance

This is a large German general contractor; the basis is delivery ready for occupancy without any own contribution.

I know that the contract is not great from the client’s perspective. Especially considering that the general contractor reserves a construction period of 25 weeks from the start of construction, but already 90% is paid after 4 weeks (and the loan must already be serviced accordingly, while moving in is still far away).

However, one must also consider that a prefabricated house is largely prefabricated. When the building shell is up, significantly more is prepared in the walls than in a conventional solid construction shell.

Also, the willingness of the general contractor to accept changes to this will tend to zero. Nevertheless, the question: Is this still okay and usual or rather already a black sheep of the family?

after 4 weeks, however, 90% has already been paid (and the loan must already be serviced accordingly, where the collection is still a long way off).

What else happens for such a long time?

Well, basically everything that still needs to be done between "Montage der Fertigwände" and "bezugfertig": screed drying, electrical installation, heating, floors, walls, painting, tiling, stairs,... just what comes to mind quickly.

That is a lot for 10% of construction costs including possible defect claims.

Maybe nothing happens for months either. The fact is, the general contractor reserves a construction period of up to 25 weeks from the start of assembly or from the completion of the basement.

If we take this further and assume that the construction loan is not taken out at a single bank, e.g. when using state funding or KfW, then by the second day of assembly you are already in the repayment phase for significant parts of the loan and are still paying rent on the side.

I would definitely not sign that. Even the 10% for the application documents is not realistic, and it continues like that. 90% then are without electrical final installation, without sanitary fixtures and fittings, tiles and wall/floor coverings are missing. In other words, everything expensive is supposed to be covered by 10%. The services certainly lie in a value range of 30-50k. Besides, these are precisely the trades where mistakes happen, where sometimes the finish is off, or where the wrong material is accidentally used. I assume heating and ventilation are missing as well.

We had 15% open at the end, after completion of the house, until acceptance. That is of course relatively much, but for you it would be mathematically below zero. If you argue over defects after payment of the 90%, he will simply stop building, but wait and delay until you give in, e.g. because of the rent payments.

Yes, that was also my first impression. There is still the possibility to withhold 5% of the first installment according to the [Baugesetzbuch] until acceptance, which does not significantly improve the situation.

The basement and garage are carried out by third-party companies and must therefore be paid in full after completion.

Which company is that?