Warranty retention / guarantee (5% of the contract amount)

Hello everyone,

we have completed our house construction planning and are about to sign the construction contract with the [GÜ]. During the due diligence, we noticed that our [GÜ] does not exactly show the best company figures. According to the [Bundesanzeiger], the annual surplus was even negative in one of the recent years. Otherwise, the equity is rather thin.

On this important topic, I could not find anything here in the forum at all. Are there people out there who secure themselves against the 5-year warranty period or at least 5% of it – just like during the construction phase? Our [GÜ] offers us this for just under 1% p.a., which we will take advantage of. The [GU]/[GÜ], in turn, obtains guarantees from some subcontractors to secure themselves.

How do you do it? Risk-seeking or risk-averse?

Best regards

Oh dear dibgsbums... Checked the cash flow statement??? Maybe he reinvested all the money to get even bigger?? See Amazon made losses for years!! How do the assets look?? Checked the asset schedule to see if the fleet got bigger? Would also drive by the boss's place to see if he drives a Porsche or just a Fiat. Good indicator! Otherwise, always no risk no fun!

Your most important lever is the payment schedule, which must exclude any overpayment. You can leave the rest to the business administration lecture. A normal construction company is not after inflated balance sheets, but wants to regularly pay those involved (especially the owners). Renting machines is more the rule than the exception. You only find that in larger construction companies. Your skepticism would be appropriate with prefab house providers/catalog providers, but not with the general contractor around the corner.

Your most important lever is the payment plan, which must exclude overpayment. You can leave the rest to the business administration lecture. A normal construction company is not after inflated balance sheets, but wants to regularly pay those involved (especially the owners). Renting machines is more the rule than the exception. You only find that in larger construction companies.
Your skepticism would be appropriate with prefabricated house providers/catalog providers, but not with the general contractor around the corner.

You didn’t address the time after the (final) acceptance at all. It is at least just as important to be secured against occurring defects within the warranty period. Basement, windows, roof, exterior/interior plaster, technical building equipment, sewage, ... there are countless events that then really cost a lot of money. And if the company no longer exists, or is on its way there, or if the wife has newly taken over the business (under a new company name, of course, so-called family businesses).

Yes, I know, could have, would have, should have. It just surprises me that in this forum with over 300,000 posts there's nothing to be found about this....

Doesn’t any of you have that on your radar?

You didn't address the time after the (final) acceptance at all. It's at least just as important to be protected against defects that occur within the warranty period. Basement, windows, roof, exterior/interior plaster, technical installations, wastewater, ... there are countless incidents that can become really expensive. And if the company no longer exists, or is on the way to that, or the wife is now running the business (under a new name, logically, so-called family business). Yes, I know, coulda, woulda, shoulda. It just astonishes me that in this forum with over 300,000 posts there's nothing about this.... Does none of you have that on your radar?

no, we have already gone through the thingamajig and are already finished with construction!

Hasn't anyone of you noticed this?

Yes, I built using individual trade contracts and withheld securities for the warranty everywhere.