Payment plan / Guarantee remaining amount Acceptance

Hello,

we are now at the stage in the planning where we will submit the building application and also address the contractual part. Basically, the following payment plan is envisaged:

(1) 10.0 % upon handing over the building application/building notification
(2) 10.0 % upon completion of the foundation slab
(3) 15.0 % upon completion of the load-bearing walls
(4) 13.0 % upon completion of the roof frame
(5) 12.0 % upon completion of the roof covering
(6) 11.0 % upon completion of window installation without front door
(7) 14.0 % upon completion of rough installation of electrical (4%), plumbing (5%), heating (5%)
(8) 6.0 % upon completion of exterior plaster. In the case of execution as a facing brick, this rate will be calculated in two installments of 3% each according to construction progress.
(9) 5.5 % upon completion of screed (2.5%) and staircase (3%)
(10) 3.5 % upon acceptance

Furthermore, the following conditions must be met at the contractual start of construction:
unlimited and irrevocable bank guarantee from the financer for the last installment according to § 3 clause 4 (in case of basement Annex 6, altered payment plan), alternatively advance payment of the last installment into the construction account with the builder's binding declaration that disbursement is only to be made after written declaration by the client of full acceptance, possibly partial disbursement taking into account any amounts to be retained by the client pursuant to § 3 clause 5.

Regarding the latter, I am a bit puzzled, although I can understand the basic idea behind it that a title alone does not buy anything. What do you think about this? It is not even 5%.
On the other hand, we must also say that he has already gone into advance performance with planning costs, soil investigation, etc., without even having a signature. We are absolutely sure that we are on the right track here.

Best regards
Sascha

Good evening Sascha,

Your potential contract partner is a person in middle age, right?

(1) 10.0% upon submission of the building application/notification
(2) 10.0% upon completion of the foundation slab
(3) 15.0% upon completion of the load-bearing walls
(4) 13.0% upon completion of the roof structure
(5) 12.0% upon completion of the roof covering
(6) 11.0% upon completion of window installation without front door

Up to here a solid 71% for a closed shell construction with building door. A no-go!

Should it – for whatever reasons – come to the worst case after shell construction, your remaining funds are not enough to complete the building!

Furthermore, the following conditions must be met by the contractual start of construction:
unlimited and irrevocable bank guarantee from the financer for the last installment ... What do you think about that? It isn’t 5% either.

That is an approach from the 1980s since at that time it was common practice among many builders to withhold the last installment.

I wouldn’t sign that either, since you are able to reduce the installments beforehand and you might have to chase your money behind the scenes; I reject a guarantee because it costs money.

Since I haven’t come across such a clause for a long time, I am not sure whether it is even legally permissible. Your building partner can only demand progress payments based on construction progress – maybe can comment on this topic.

Rhenish regards

Hello,

thanks for your reply. My contracting partner is a GmbH, but the person behind it himself is middle-aged. How do you come to that conclusion?

The total amount is 380,000 €. Electrical work then accounts for 15,200 €, sanitary and heating each 19,000 €. Electrical is internally calculated with 9,000 €, but the 19,000 € for geothermal energy with drilling will in my view be too little. For the two straight staircases we need, we have a budget of 11,500 € at our almost free disposal, so either with his proposal or any other stair builder. That also fits with the 3%. However, points 1-6 also include a garage, which should be added as an extra point. I think that the individual trades can fit after the shell construction, but of course I don’t know what else might be missing. What do you think?

Regarding the last point, it ultimately concerns the proof that the money is still there at that time. I’ll sleep on that. Or offer him that he gets it against security; the other way around also works.

Best regards
Sascha

71% is still a lot despite the garage

Good day Sascha,

My contractual partner is a GmbH,

That means he is liable up to the amount of the contribution and beyond that with his personal assets. Is such an amount available?

He himself is of middle age. How do you come to that?

Because of the guaranteed final installment.

The total sum is €380,000. Electrical then accounts for €15,200, sanitary and heating each €19,000. Electrical is internally calculated with €9,000, but the €19,000 for geothermal energy with drilling will be too little from my point of view. For the two straight staircases we need, we have a budget of €11,500 virtually at free disposal, either with his proposal or any other staircase builder. That also fits with the 3%. But points 1-6 also include a garage, which should be included as an extra point. I think the individual trades can fit after the shell construction, but of course I don’t know what else might be missing. What do you think?

If you accept the payment plan as given, you are far from finishing trades. With 71%, the closed shell excluding exterior plaster is paid; no more and no less and from my point of view that is clearly too much. More than a max of 60% should not be transferred at this stage so that payment, planning service, and construction status roughly match. 100% coverage rarely works; sometimes one, sometimes the other contractual partner is 1-2% ahead.

Regarding the last point, it is ultimately about providing proof that the money is still there at that time.

Understood.

Or offer him that he gets it against security, it also works the other way around.

He should offer you security of his own accord, regardless of any payment steps!

Rhenish regards

how is it actually if I build with a basement? It should shift since I have already paid well over 50% for the closed shell construction, right?