Termination of work contract for house construction (before construction)

Hello everyone,

my partner and I have been looking for a suitable building plot in Berlin and the surrounding area for quite some time.

During this long search, we naturally had a lot of contact with various construction companies, one of which repeatedly stood out very positively, especially due to personal experiences of other builders; this is how we came into contact with this construction company.

After some time, they also offered to search for plots for us and to inquire about plots for which we could provide addresses but could not identify the owners because the plots are lying fallow, i.e., uninhabited. That sounded good to us, and the only condition was that we first conclude an appropriate service contract with this home construction company, from which we could also withdraw free of charge.

The service contract itself states that the right to terminate the contract and the notice periods are governed by the Building Code. Furthermore, it says: "If the client terminates, the contractor is entitled to claim the agreed remuneration, but must offset the expenses saved as a result of the contract cancellation."

In addition, we have attachments to this contract which include that the contract can be terminated free of charge if one of the following obstacles cannot be removed by the client: no building plot found and financing not realizable.

There is also an agreement with the brokers of the home construction company that they will search for a building plot for us. The broker commission would also be significantly lower than usual on the market, provided that we then also build with this company. Otherwise, the regular commission applies.

Fortunately, it has now happened that we have already been offered a plot (directly from the owner) that we would very much like to buy. However, over time, we have gotten to know another construction company better, which could make us a significantly better offer for this region (topic soundproofing because of proximity to the airport).

We now want to terminate the original service contract and preferably do so without complications.

What is your view on this, how would something like this look legally? I am not a lawyer and my legal expenses insurance "still" does not want to intervene as long as there is no actual case – it is probably only hypothetical.

I understand that if we terminate now, the construction company will demand the agreed amount from us, minus the services not yet performed. What have they done so far? Sales and brokerage work. Do I have to pay for this now?

Because with the reasoning "no building plot found," that won't work; after all, that does not refer to the construction company not finding a building plot, but to the clients not being able to remove the obstacle. We were able to do this recently – albeit without the help of the construction company.

I am grateful for any tips,

best regards

You won't get out of this situation that easily. "Pacta sunt servanda" also applies to you. This means that contracts must be honored.

First, it will be necessary to clarify how the contract can be terminated at all if the already listed conditions cannot be affirmed. What does the contract provide for in this regard, if there is any provision at all?

Whether any "visible" expenses have already been incurred cannot certainly be assessed. There is a lot of leeway for the entrepreneur here. He will also certainly want the expected profit, since he was allowed to rely on this.

But from your perspective, there are probably a number of arguments as well.

A dispute is almost certainly inevitable, so consult a lawyer before any action and discuss the situation. As a result, a viable solution will emerge and the approach will likely fit the entrepreneur's expected reactions.

I will probably never understand how one can bind oneself contractually to such an extent without having at least seen a property. Most entrepreneurs will go property hunting even without such an order to obtain it. So why the pre-construction commitment?

Why we had the building commitment beforehand, I have already written. We had been searching for a plot of land for a long time before, and the house construction company offered to assist us with that. We repeatedly discovered abandoned plots that interested us, but we couldn’t identify an owner there. And if you’re not an expert, you don’t know beforehand that there are ways to find out the rightful owners.

That turned out badly, we have already realized that. But now I don’t want to hear that I did something wrong—I have already admitted that myself—but rather how we can get out of this most easily.

As I said, about the lawyer: My legal expenses insurance only applies if there is a case. So going to a lawyer beforehand is not covered.

As already mentioned, it is not that simple. The passage about the saved expenses refers not only to what he has already done but also to everything he would have done. He must/will prove to you that by terminating the contract he does not have to buy building materials and can possibly deploy his workers/employees differently; what remains in the end you must legally pay. For a single-family house, I would estimate that to be around 10-20k. The right of withdrawal is regulated in the VOB, what you have to pay in the Building Code.

I will probably never understand how one can contractually bind oneself without having at least seen a property. Most entrepreneurs will go property hunting even without such an order to obtain it. So why the building commitment beforehand?

Me neither! But look in the neighboring thread, the OP argued similarly there. Whether he really understood my arguments or just gave up because of my answers is anyone’s guess

Rhenish greetings

But look in the neighboring thread, the OP argued similarly there.

That is indeed the case. However, the sellers really do demonstrate an apparently effective sales strategy. Many interested parties are dazzled by it, even if they have no idea where the costs of building a house will go. I observe that such constellations often arise at a very early stage. The interested parties visit show homes, and the salespeople wandering around there do what they are paid for: they awaken the desire for building a house .... now .... immediately. It will only get more expensive, and interest rates are currently historically low.

However, the scarce construction resources are reserved only for "real" customers. And only for these are plots of land purchased. You can choose your customers, business is great, and the plots are very, very scarce. Practically not available privately, but we have the appropriate contacts.

The desire for something of one's own can then become a fixed idea, and suddenly ... one has personally experienced something like being blindsided. Right after signing, the feeling often becomes so queasy.

Always the same game.