Principal's Guarantee

Hello everyone,

Over the past few weeks, I have read thoroughly through this forum and was impressed by the many helpful tips and information!! That is why I registered here today to participate in the discussions and exchange of experiences!!

I am also planning to build a prefabricated house and have already had some contact with consultants from various companies... One consultant informed me that his company generally requires a financing confirmation with a guarantee certificate from the bank of the builder covering at least 70% of the contract sum! Thanks to the posts here in the forum, I was at least sensitized to this issue and possible risks (e.g., payments despite defects or services not rendered) and would like to find out,

a) whether the clauses mentioned below are among those that are advised against
b) whether such clauses are now standard (after the relevant Federal Court of Justice ruling)
c) or whether I should be "concerned" about having been with the "right construction company"

For example, the guarantee certificate states among other things:

"Builder instructs bank to transfer to construction company according to the following payment schedule (percentages according to construction progress follow)"

"Builder's bank assumes the suretyship for all payment obligations incumbent on the builder as a primary debtor, waiving the objection of prior enforcement..."

"Bank of the builder waives the objection of contestability and set-off, provided the builder’s right of contestation / counterclaim is neither undisputed nor legally established..."

What is to be made of this? Are such formulations common? Is this an assignment of claims??

Thanks for your opinions!!!

Regards

"the Newcomer"

Project 2012

Hello,

c) or whether I should have "thought" about being with the "right construction company"

(...)

Is this an assignment of claims??

Yes, that could be called that and with that the point "c" should answer itself.

Serious companies expect from you a financing confirmation with the note that these confirmed funds may only be used for the house construction. Companies set up in this way generally offer you in return a completion guarantee, which after the end of the construction period turns into a 5-year warranty guarantee.

Interesting in this context would be the amount of installment payments to be made until the closed shell in percent. I am almost certain that the amount will evolve implicitly according to the conditions you mentioned regarding the guarantee document.

Kind regards

Hello construction expert!

Thank you for the quick response! Hm...I don't know if one is allowed or should mention names here, but I actually considered this company to be very reputable and working in the higher price segment...or at least I have heard and read corresponding positive things...

Regarding the payment terms in the guarantee:

10% after production-technical inspection and return of the production plans to the architect

70% after the building structure is erected, windows, shutters, chimney, front door installed, roof covered, sanitary and electrical installations executed

15% after plaster surfaces are filled, bathroom complete/bathtub installed

5% remaining amount after submission of the signed acceptance protocol

Regards and have a nice evening

Project 2012

Hello,

Hm...I don't know if you are allowed or should mention names here, but I actually considered this company to be very reputable and working in the higher price segment...or have heard and read corresponding positive things...

Why shouldn't you be allowed to? Many users here ask about the experiences of other users with the providers "xyz"; you should only refrain from advertising (i.e. linking).

10% after production-technical inspection and return of the production plans to the architect

So after submission of the permit-free building approval; that is okay.

70% after the building structure is erected, windows, roller shutters, chimney, front door installed, roof covered, sanitary and electrical installations carried out

In one sum or in how many payment installments?

Kind regards

Hello construction expert,

the 70% is requested as a "lump sum" after completion of the mentioned works (timed on the 4th day of construction), so no further partial payment steps between the already paid 10% in step 1 and this partial installment....

Regards

Project 2012

Hello,

the 70% are demanded as a single "chunk" after completion of the mentioned works (timed on the 4th assembly day), so no further partial payment steps between the already paid 10% in step 1 and this partial payment....

That means your prefabricated house comes literally finished, electrical installation completed and sanitary rough installation ... interior doors, windows, etc.?

Hmm - is there an acceptance inspection before you have to pay the 70%?

I rarely or never deal with such constructs and am accordingly curious; still also regarding the provider

Kind regards