Price increases in construction contracts related to Corona

  • Erstellt am 2021-04-04 21:16:09

Catsuma

2021-04-04 21:16:09
  • #1
Hello everyone,

I have been reading a lot in this forum since planning my own house and have already taken away some helpful insights, thanks for the great contributions here! :) Since I am now about to finalize a construction contract myself, I would greatly appreciate your opinion on 2 passages in the contract. I planned a timber-frame house through a regional, small construction company (as a general contractor, no self-performance) with a good reputation in the region and have now received a construction contract containing the following passages:

1) ...the prices are fixed based on the purchase prices at the date of the offer preparation. Due to Corona, prices can currently change significantly. If during the execution (planned 2022) there is an increase in purchase prices compared to the date of the offer preparation by more than 5%, an adjustment to the new price will be made. The contractor must provide proof of the price change; the contractor bears changes up to an amount of 5%.

2) ...the completion date (rather generously set at 2 years) requires a building permit to be granted within 4 months after the building application is submitted. If the building permit is delayed, the completion date will be postponed. If the completion is delayed by more than 6 months (i.e., 2.5 years), the final invoice amount will be increased by the market-standard price increase (3%).

Both points can unpleasantly change the total costs of the house construction.

Regarding the first: I have of course noticed that timber prices have risen significantly recently and can therefore understand that regional, smaller house building companies want or have to protect themselves. But with a massive increase in costs, I feel quite badly off (whereby 10% more timber material costs should not result in 10% higher total costs). And if the execution begins in 12 months, a price increase would presumably already apply automatically.

Regarding the second point: in 2020, the average processing time of the building authority for private building applications was 18 weeks... the building authority cites Corona as the reason for the long processing time. A delay of more than 4 months is therefore practically inevitable.

I have a meeting about the construction contract soon and will of course address these points openly, but I have also come to the conclusion that there is no way around a contract expert.

How do you see these 2 passages? Is this now common for small house construction companies?

Best regards,
Cat
 

ypg

2021-04-04 21:57:31
  • #2
And with an "increase only" of less than 5%, you are doing well. I think it's good that the general contractor includes these points in the contract instead of arriving with stuttering (in terms of cash flow) at some point. A contract where only one side wins over a long period is unrealistic, yet it is often read that this is still how it is handled. Basically, you should get an expert for your house construction. The contract also includes contract review. However, he works for you, which means he will point out such things to you, but that does not mean that the contract is illegal and has to be changed. You yourself have the right to find someone other than the general contractor who does not have such a clause. But that also does not mean that everything will proceed to your fullest satisfaction. Companies that do not protect themselves also quickly become insolvent.
 

nordanney

2021-04-04 22:38:01
  • #3

Otherwise, the general contractor is in quite an awkward position. I wouldn’t want to build with a contractor whose margin (between 10 and 20% for housebuilding) vanishes into thin air. That only causes stress.
The regulation is very fair though! The general contractor covers 5%. Great thing for you.

Also absolutely ok.
But I would include a clause that sanctions the general contractor’s fault. So something like starting construction at the latest X months after the building permit. Penalty payment if completion is not within X months after the start of construction (which the general contractor is responsible for – so bad weather/winter excluded).
 

Stefan001

2021-04-04 22:46:20
  • #4
What happens at 6%? Do you then pay 1% and the general contractor 5%, or do you all pay the full 6%?
 

HilfeHilfe

2021-04-05 07:54:48
  • #5
Absolutely fair. Why should the general contractor take the risk off your shoulders and bear the costs.

He also wants to protect himself
 

hampshire

2021-04-05 08:46:01
  • #6
Is balanced and fair - (not quite) like a comprehensive insurance with a deductible. If the surcharge and the time delay become too tight: build smaller or less elaborately.
 

Similar topics
03.08.2012Contract Supplement to the Construction Contract by the Developer36
02.09.2015Construction contract before financing24
16.02.2016Question about contractual completion14
03.09.2016Buy the kitchen more than a year before completion?54
08.08.2016Payment before or after completion of the construction phase?51
26.10.2016Construction contract: Duration of construction34
01.12.2016Construction company rejects change requests in construction service description and construction contract39
28.02.2017Are securities customary for completion and warranty?24
10.12.2017New construction contract law starting from 2018. Sign the construction contract after that?14
28.06.2018Construction contract signed under pressure. Was that a mistake?41
19.08.2018Strategically well-planned handover completion under building supervision11
29.09.2020Building permit before completion of development31
13.04.2020"Corona" clause in the construction contract21
08.07.2020Retention 5% Security Payment GU Construction Contract18
27.03.2021Cancellation of construction contract is not confirmed23
19.09.2021Price increase - Our construction company wants 21.4% more211
22.05.2022Construction company price increase of 25% – Expired fixed price guarantee58
18.10.2022GU demands a price increase on the entire house122
06.11.2022Fixed price offer with construction price index adjustment in the construction contract22
28.04.2025Construction contract before building permit?10

Oben