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.
X
xMisterDx6 Oct 2022 19:49Don’t forget that many smart comments here come from people who are already living in their completed homes and no longer have to worry about disputes with their general contractor.
15,000 is nothing compared to a long (multi-year) legal battle.
15,000 is nothing compared to a long (multi-year) legal battle.
M
MSHausbau6 Oct 2022 19:55hauskauf1987 schrieb:
I find your lawyer’s statement very disappointing.
50k more for what exactly? On what basis? Have everything disclosed, original cost calculation, old purchase prices, new purchase prices.
Legally, the price increase can only apply to the part of the construction built after the fixed price period expires, right?
So, as you wrote, at most 18.66% of the construction costs.
Don’t let yourself be pressured; the construction companies just want to protect their profit margin. I think the lawyer just wants to avoid a legal dispute for us.
I also told him about the disclosure. He immediately said he wouldn’t do that. I will tell him tomorrow that if it goes to court, he will have to disclose everything anyway.
In my opinion, a price increase is not meant for this purpose, but rather to compensate for the rising material costs.
X
xMisterDx6 Oct 2022 20:04You want to threaten with a lawsuit right away?
Good luck! Ask your lawyer first what they think about the idea...
Good luck! Ask your lawyer first what they think about the idea...
MSHausbau schrieb:
I think the lawyer just wants to protect us from a legal dispute.
I also told him about the disclosure issue. He immediately said he wouldn’t do it. I’ll tell him tomorrow that if it goes to court, he will have to disclose everything anyway.
In my opinion, a price increase isn’t meant for that. It’s supposed to compensate for the rising material costs. I would be careful with what he has to disclose in court, as he might interpret that as a threat later on. And as long as the house isn’t finished, the general contractor (GC) still holds more leverage.
I would approach the conversation more from the angle of “we can’t afford this,” even if you actually can. The GC also has an interest in getting paid.
Gather your arguments, such as that the house could basically have been completed at that price if the building permit (planning permission) hadn’t taken so long to be issued, that you’re willing to pay extra for the missing trades, etc.
I personally wouldn’t mention the lawyer and court immediately; only bring up seeking legal advice if he refuses to compromise.
X
xMisterDx6 Oct 2022 20:10By the way, I also don’t believe your construction timeline guarantee is still valid if the building work is on hold due to legal disputes. Unless you are speculating on winning and then accusing the main contractor of a 2-3 year delay.
I would think carefully about the issue of going to court (or even just threatening to do so).
Basically, the damage was already done when such an unfavorable contract was signed. Even if the fixed price is only guaranteed for a limited period, the contract should include some clause about an alternative end date. As it stands, it is simply left open. The contractor could now demand $200,000. Where is the line between reasonable and excessive, what is acceptable, and what is legitimate? I find the wording itself more than questionable.
Be cautious about taking legal action against a construction company. They may have the upper hand, including financially. These cases can become very expensive very quickly. Every legal expenses insurance policy excludes disputes related to real estate for good reason. In cases like this, no one will cover the costs except yourself, and you would have to win the case to avoid being stuck with the expenses. Even with a settlement, each party usually pays their own legal costs, and that can quickly reach an amount that requires you to take out a new loan.
Basically, the damage was already done when such an unfavorable contract was signed. Even if the fixed price is only guaranteed for a limited period, the contract should include some clause about an alternative end date. As it stands, it is simply left open. The contractor could now demand $200,000. Where is the line between reasonable and excessive, what is acceptable, and what is legitimate? I find the wording itself more than questionable.
Be cautious about taking legal action against a construction company. They may have the upper hand, including financially. These cases can become very expensive very quickly. Every legal expenses insurance policy excludes disputes related to real estate for good reason. In cases like this, no one will cover the costs except yourself, and you would have to win the case to avoid being stuck with the expenses. Even with a settlement, each party usually pays their own legal costs, and that can quickly reach an amount that requires you to take out a new loan.