ᐅ General contractor requests price increase for the entire house
Created on: 6 Oct 2022 15:33
M
MSHausbau
Hello everyone,
I’ve read a lot and hope to get some advice...
We are building a house and are about 90% finished. The fixed price agreement expires at the end of October, and the contract doesn’t specify what happens afterward.
Now our general contractor is asking for €50,000.
His reasoning: As of today, the house is 18.66% more expensive, which is €51,250, so he is demanding €50,000 from us.
He already indicated over the phone that it probably won’t be the full 50K, but the 10K we offered was too low.
Now the question is, are we completely mistaken? I don’t see why we should pay extra for the entire house, only for the items that are still outstanding. That would be about €8,000 if you really apply the 18%.
Do you understand what I mean?
Does anyone have legal experience or some tips on how to argue this?
Our lawyer advises settling in the range of €15,000 to €20,000.
I’ve read a lot and hope to get some advice...
We are building a house and are about 90% finished. The fixed price agreement expires at the end of October, and the contract doesn’t specify what happens afterward.
Now our general contractor is asking for €50,000.
His reasoning: As of today, the house is 18.66% more expensive, which is €51,250, so he is demanding €50,000 from us.
He already indicated over the phone that it probably won’t be the full 50K, but the 10K we offered was too low.
Now the question is, are we completely mistaken? I don’t see why we should pay extra for the entire house, only for the items that are still outstanding. That would be about €8,000 if you really apply the 18%.
Do you understand what I mean?
Does anyone have legal experience or some tips on how to argue this?
Our lawyer advises settling in the range of €15,000 to €20,000.
MSHausbau schrieb:
My concern is only about the additional claim, which I simply find exaggerated. The boss himself wrote in an email that the total cost for the house is 51,000 more. But we are almost finished and are supposed to pay the full increase for the entire house? I think that’s wrong… what do you think? I would also find something else fair, but unfortunately what I personally consider fair doesn’t count for much 😉
From the contractor’s perspective, I first find it understandable that he throws the 50k in as a shock factor (aka, you might as well try it, maybe someone won’t object). But I suspect he already expected that you would negotiate it down.
So my impression would also be to gather arguments why it should be less, possibly with a lawyer(?), and then bring that back to the negotiation.
M
MSHausbau6 Oct 2022 18:02mayglow schrieb:
I would personally define fair differently, but unfortunately, my personal sense of fairness doesn’t count for much 😉
From the contractor’s side, I find it understandable that they initially throw out the 50k as a shock figure (aka, they might as well try it, hoping one party won’t object). But I suspect they have already factored in that you will negotiate that amount down.
So my impression would be, yes, gather arguments why it should be less, possibly consult a lawyer(?), and then try again with that.Yes, that’s understandable to me as well. But you can’t just demand an increase for work that’s already completed, can you? For example: the shell construction cost 20k. Now they want 5k more even though that happened long ago and was within the fixed price.Unfortunately, I can’t find any legal basis except a ruling from the Higher Regional Court Hamm. But you have to twist it quite a bit to apply it…
That’s why I thought maybe someone here has been in the same situation.
I know the general contractor is doing this with another client for 40k. But they haven’t started building yet.
X
xMisterDx6 Oct 2022 18:03You could ask a second lawyer as well. If they also say "Settle somewhere between 15,000 and 20,000," then I would go for that. It’s frustrating, but you can really only lose otherwise.
MSHausbau schrieb:
Yes, it’s understandable to me as well. But can you really demand an increase for something that is already completed?As I understand it (note: amateur opinion, not legal advice):
Yes, because:
Usually, you agree on a fixed price for the entire house and make progress payments during the construction period. However, these payments do not constitute acceptance.
Only at the final handover of the house at the end of the project is the entire work accepted, and the full price becomes due. It’s similar to paying monthly installments for your gas consumption throughout the year, but what truly counts is the annual bill.
A good example was during the Corona year, when VAT was temporarily reduced. Many homeowners wanted to take acceptance of their houses within that year because the final invoice was then 3% cheaper, which is a huge amount when dealing with a six-figure house price. In the months before, progress payments were made with 19% VAT. This difference was then settled in the final invoice.
K a t j a schrieb:
However, I am not a lawyer and I am quite surprised by the expert’s statement. I also suspect that the expert may have assessed the situation this way because a real legal dispute would be more costly, so they consider reaching an agreement to be more reasonable. But this is just a guess.
MSHausbau schrieb:
That’s why I thought someone here might have been in the same situation. I believe there are a few posts where people were still in the project phase when notices about price increases arrived. For example here https://www.hausbau-forum.de/threads/preissteigerung-trotz-festpreis.43103/ but I don’t know how it was ultimately resolved.
I also vaguely remember that @Pinkiponk experienced unexpected cost increases later in the project, but I’m currently having trouble finding a thread to check whether that was comparable or not at all.