ᐅ Semi-detached house: two contracts (landowner and construction company)
Created on: 17 Jun 2021 18:55
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HubiTrubi40
Hello everyone,
it’s me again... but you advised me so well last time that I backed out of my last house purchase attempt (rightly so!). Now I have something new, and here too there seem to be one or two potential pitfalls. It is a semi-detached house (a total of 12 are being built). The seller is a real estate agency. The land belongs to an investor and is being legally divided. There will be two contracts: one with the landowner for the purchase of the land and one with the construction company (contract for work). The notarized purchase contract covers the total price package (just over 600,000 plus additional costs). Since this is a so-called initiator model (never heard of it before, but according to the marketer it is common), extras can be added afterwards—for example, an additional bathroom. These costs are then charged separately and added on, with so-called layout variants offered. The advantage is that property transfer tax and notary fees are only calculated on the base package. The savings are limited. Depending on the chosen variants, the price increases by another 15,000-20,000, depending on what you want.
I spoke with a lawyer who advised me to stay away. Why? Because you sign two contracts and could face difficulties deciding from whom to claim warranty if something goes wrong. What do you think? The company seems reputable, and my impression is that this is a common approach, but apparently it is not a developer in the usual sense. Anyway, I’m uncertain whether this is a good idea. I could reserve now. For that, I would have to pay 1,000 euros, which I would get back if I withdraw from the reservation within four weeks. These four weeks are intended for clarifying financing, further consultations and planning discussions, and the notarization appointment. Is this reasonable? Otherwise, everything looks okay so far; the house and land are fine (260 sqm (2800 sq ft)). I think building myself (I am still on the waiting list for a building plot) wouldn’t be cheaper, and existing properties are usually just as expensive if not more so. I have an appointment this Saturday to look at a smaller terraced house (125 sqm (1350 sq ft) versus 140 sqm (1500 sq ft) like in this offer). First, it is considerably older and the price is also around 600k. Oh, one thing that surprised me about this offer: the construction period from the start of building (planned from September—planning permission should already be granted) is 20 months. That seems quite long to me. So moving in would only be possible in about two years.
Best regards, Hubi
it’s me again... but you advised me so well last time that I backed out of my last house purchase attempt (rightly so!). Now I have something new, and here too there seem to be one or two potential pitfalls. It is a semi-detached house (a total of 12 are being built). The seller is a real estate agency. The land belongs to an investor and is being legally divided. There will be two contracts: one with the landowner for the purchase of the land and one with the construction company (contract for work). The notarized purchase contract covers the total price package (just over 600,000 plus additional costs). Since this is a so-called initiator model (never heard of it before, but according to the marketer it is common), extras can be added afterwards—for example, an additional bathroom. These costs are then charged separately and added on, with so-called layout variants offered. The advantage is that property transfer tax and notary fees are only calculated on the base package. The savings are limited. Depending on the chosen variants, the price increases by another 15,000-20,000, depending on what you want.
I spoke with a lawyer who advised me to stay away. Why? Because you sign two contracts and could face difficulties deciding from whom to claim warranty if something goes wrong. What do you think? The company seems reputable, and my impression is that this is a common approach, but apparently it is not a developer in the usual sense. Anyway, I’m uncertain whether this is a good idea. I could reserve now. For that, I would have to pay 1,000 euros, which I would get back if I withdraw from the reservation within four weeks. These four weeks are intended for clarifying financing, further consultations and planning discussions, and the notarization appointment. Is this reasonable? Otherwise, everything looks okay so far; the house and land are fine (260 sqm (2800 sq ft)). I think building myself (I am still on the waiting list for a building plot) wouldn’t be cheaper, and existing properties are usually just as expensive if not more so. I have an appointment this Saturday to look at a smaller terraced house (125 sqm (1350 sq ft) versus 140 sqm (1500 sq ft) like in this offer). First, it is considerably older and the price is also around 600k. Oh, one thing that surprised me about this offer: the construction period from the start of building (planned from September—planning permission should already be granted) is 20 months. That seems quite long to me. So moving in would only be possible in about two years.
Best regards, Hubi
HubiTrubi40 schrieb:
The investor sells you the land, and then the construction contract is signed with the contractor (homeowner). I assume the agency marketing it is included in the price. That may be true, but: if I neutrally call you the "end customer" (even though I tend to think that here you can be regarded as the homeowner, even if not completely free in choosing the general contractor), and you buy parts from two parties (namely the land from the investor and the building from the marketer), what then gives the marketer the power to guarantee you the capped total price?
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
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HubiTrubi4027 Jun 2021 13:41Hello everyone, thanks again for your advice. Basically, I was close to agreeing, but after doing more thorough research, I have decided probably not to go ahead. The construction company, which also acts as the client, has only existed for 2 years. So far, so good. However, it appears that they have gone bankrupt more than once. Of course, I understand that can happen in the construction industry, as many factors come into play. But I don’t understand why they operate several limited liability companies that sometimes have the same business purpose, which makes the situation less transparent for me. For this reason, I will probably decide to step back.
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nordanney27 Jun 2021 15:28HubiTrubi40 schrieb:
However, it seems this company has gone bankrupt more than once. Sure, I guess that can happen in the construction business. There are many factors involved. No, even in the construction business, this should not happen just because it’s construction. Anyone who goes bankrupt multiple times has no place in the market, because it’s not the circumstances or others to blame for the trouble. It’s simply incompetence.
HubiTrubi40 schrieb:
But why they operate several limited liability companies (LLCs / Ltds) with sometimes the same business purpose, I don’t understand. That is quite common with larger enterprises. Each project is handled by its own company.
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HubiTrubi4027 Jun 2021 16:42Ok, so this means that having such a portfolio of companies is common. I just noticed that the company does not yet have any finished projects to showcase. So far, there are only references to projects—some have been started, but nothing completed yet. However, some of these projects are very large.
Well, keeping a distance might be safer, but whether it is the best choice here – who knows... You can (and should) be helped. After all, the children keep growing while dad is looking for and struggling to find a home of his own.
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
H
HubiTrubi4027 Jun 2021 22:06@11ant Sure, you never know, and hopefully everything will go well. There is always some risk involved. But with such amounts of money, if things go wrong, it can be quite tough. I always think there is also a part that depends on gut feeling in situations like this. If that isn’t right, it’s difficult. Basically, you’re right of course. It’s a race against time, and clearly, the children are growing up. I’ll keep my eyes open for any opportunities anyway.