Please evaluate the payment plan

The client receives the legally owed security deposits in accordance with § 632 a paragraph 3 of the Building Code. Upon the first installment payment, the client must be provided with a security for the timely completion of the work without significant defects amounting to 5% of the remuneration claim. If the remuneration claim increases by more than 10% due to changes or additions to the contract, the client must be provided with an additional security of 5% of the additional remuneration claim upon the next installment payment. At the contractor's request, the security deposit shall be made by withholding installment payments so that the client retains the installment payments up to the total amount of the owed security. The security can be provided by a guarantee or other payment promise from a credit institution or insurer authorized in the European Union.

Cool thanks, those are really concrete suggestions.

But now a question about this and please don’t stone me because I apparently haven’t understood it yet. The 5% security retention is, as I understand it, mandatory according to the Building Code. Only the form is supposed to be agreed upon, right? What options are there or what kind of agreement do you mean? Retention of the amount, bank guarantee, or insurance? What is it actually about when some people say that the 5% are only given after 5 years and after the warranty period has expired?