Several troubling contract clauses

This is a family business GU,
their very high-quality expertise lies in construction and not in construction law.

Our GU has addressed some, though not all points criticized by the lawyer. Strictly speaking, some of the things stated there could be challenged in court because they simply contradict the Building Code.

It is not uncommon that "not entirely perfect contract texts" also indicate that the company builds far fewer houses than it has legal disputes. Stability in the commercial register (capital, balance sheets, business address, acting persons) is a good indicator of reliability. An army of top-grade lawyers rather suggests a sly character ;-)

Thank you very much for the notes regarding the audit. We had a meeting with the managing director yesterday because there were still some discrepancies concerning services from the preliminary contract that suddenly were no longer included. We have clearly stated our position and are now waiting for the result. If it is satisfactory, we will have the contract carefully reviewed.

We had a meeting with the managing director yesterday because there were still some discrepancies regarding services from the preliminary contract that suddenly were no longer included.

What kind of preliminary contract, and how were reductions in services justified?

Always tell the whole story. That saves the follow-up questions ;)

Always tell the whole story. That saves the follow-up questions ;)

Hello, you are right.

In August, we signed a preliminary contract for a specific house with the construction company. This house has a fixed scope of services with a fixed price. Additionally, we negotiated other services that are also included in the fixed price. These were attached to the contract in a signed addendum and the price was fixed. In return, we made a down payment so that the planning work could begin. This down payment included, besides the architect's services (interior layout changes), also the soil/ground survey and somewhat vague services like dates for the sample selection, etc. The down payment amount was to be credited when signing the work contract, since the planning services are included in the total house price. The idea behind this was to give us an exact price for the bank in the work contract, including all sample selection requests, so planning could start immediately. The planning phase was supposed to last four weeks (due to summer time and employees on vacation), possibly at most six weeks.

Now it is like with many construction companies. The 4-6 weeks turned into 3.5 months. Then finally the last meeting with the work contract, which was supposed to give us information about the costs. We are building on a slope, so we were also curious about the cost estimate for the earthworks after the soil test and the additional height measurements commissioned by us. There was also the option to make the attic more accessible with a space-saving staircase and possibly insulate the roof so that we could potentially convert it later but at least meet KFW requirements. The other option was to create a space-saving staircase and a small hallway in the attic, which was thermally separated. We wanted to pursue this option if the earthworks remained within budget and the construction company made us a good offer for it, as we also have a budget to keep.

So we were quite surprised when we were presented with a new price that was several tens of thousands above the fixed price but neither included the cost estimate for the earthworks nor the attic access. On the contrary. There was no breakdown of individual cost items, only the total price, and some things that we had negotiated in the fixed price were completely missing. And these were not trivial matters.

Our actual upgrades were very modest. We tried to mostly stay with the standard. An extra shower in the guest WC (price ??), larger tile formats in the bathrooms (several hundred euros difference), the bedrooms should be lockable (120 euros). A mesh on a specific interior wall to prevent cracks (300 euros). A door instead of a window in the utility room (extra cost???). Possibly a more scratch-resistant exterior coating for the windows and front door. This should only cost a total of 850 euros. An installed electronic lock on the front door for 450 euros, which we have considered (but will remove anyway). The listed additional costs were also not included in the cost offer. I only know them because I always asked during the sample selection.

In addition, there was a contract full of clauses (for us) disadvantageous. You can probably imagine that we were quite concerned at first. At that point, I wrote my post here on the forum. Over the weekend, I wrote a three-page letter listing all unresolved points and a request for immediate clarification to the construction company. This was received on Monday and we were promised a quick resolution. Only on Friday were we offered an appointment with the managing director on the following Monday. This meeting was extremely frustrating, especially at the beginning. He kept talking about price increases since we signed the contract and that is why it is so expensive. My counter-argument that we signed the preliminary contract for a fixed-price house and that this delay was solely due to his company, which stretched the deadlines, was not really accepted. He also could not accept that any reasonable businessman includes foreseeable price increases in his cost estimate and does not simply pass them on to the customer after contract conclusion and due to his own poor time management (after all, we have had a pandemic for almost two years). There is also no clause in the preliminary contract saying that the price is limited to a certain time.

I asked the managing director who would bear my additional costs. Because of his failure, the interest conditions have worsened. We can now forget about the KFW 55 subsidy, even though we calculated our budget for a KFW 55 house. Meanwhile, our financial broker and the banks are on vacation, we still do not have a valid work contract with which we can finally apply for financing, and the subsidy expires at the end of January.

Since Monday, one day before Christmas (today), we have heard back from the managing director. He apparently acknowledges that the negotiated and contractually fixed services are included in the house price. However, he wants to charge us about seven and a half thousand euros as an additional price increase over the last four months on top of our fixed price. And also to invoice the soil survey for one and a half thousand euros, which is already contractually included in the scope of services and was already paid with the down payment. Of course, we will not pay that.

Unfortunately, I cannot say whether the additional services are reasonably priced. Due to the delays, we are forced to switch to Kfw 40. Unfortunately, there is little room for negotiation here. But I would appreciate your assessment. Maybe some of you have built similarly and can give me an approximate price range. The reinforced insulation (we have mineral insulation) needed to go from KFW 55 to 40 is supposed to cost an additional eleven and a half thousand (in addition to the existing insulation). Then there is the necessary photovoltaic system for KFW 40. This will of course also mean extra cost, and we could obtain an offer from the company's contractual partner. We really have to swallow hard because the difference in the actual KFW subsidy is only seven and a half thousand.

Tomorrow I will write the prices for some of the extras and would be happy if someone would share their opinion.

If we can agree on price with the company, we still have to deal with the actual contract, which contains some clauses that are really unfavorable for us.

In the worst case, we have to say goodbye to the company. But the lost money and the lost time and opportunities would really be a shame.

Good night to all other night owls.

I'll give you an example. I paid about €11/m2 for Knauf core insulation board WLG032 facade 200mm (2x100mm offset), without KfW it would probably have been 180mm WLG035 for €7/m2. For a 220m2 facade, that’s a ridiculous €880 extra cost. Of course, more expensive is the XPS, foam glass gravel or whatever under the floor slab. By now it probably costs €15/m2 for 10cm. Insulation wool for the roof is a bit more expensive but here you might face extra costs of €4-6/m2. Therefore, the additional cost for insulation is really ridiculous. People just let the subsidy cost them a lot. Much more expensive are central ventilation, better windows, heat pumps, photovoltaics, and storage. My windows, for example, have a Ug of 0.5 with a 7-chamber profile from Schüco. That’s where the money goes.