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.
M
MSHausbau6 Oct 2022 20:15Okay, you’re right. It probably wouldn’t be wise to involve a lawyer and the courts right away. But I also don’t see why I should pay more for the entire house. Only for the specific trades or the outstanding items in the payment schedule. Unfortunately, there are no court rulings on this matter yet. Because otherwise, many homeowners would basically be easy targets for the general contractor once the fixed price period expires.
For now, I will try to resolve this reasonably over the phone tomorrow.
I will also post the ruling from the Higher Regional Court of Hamm tomorrow. Maybe some of you can make better use of it or see how it could be applied.
Thanks anyway for the advice 🙂
For now, I will try to resolve this reasonably over the phone tomorrow.
I will also post the ruling from the Higher Regional Court of Hamm tomorrow. Maybe some of you can make better use of it or see how it could be applied.
Thanks anyway for the advice 🙂
MSHausbau schrieb:
Unfortunately, there are no court rulings on this matter yet. Otherwise, many clients would effectively be left vulnerable to the general contractor once the fixed price period expires. I have already signed two general contractor contracts, and neither included a clause for the expiration of the fixed price period.
I consider this unprofessional, especially given the explicitly short period of 12 months stated in your contract.
M
MSHausbau6 Oct 2022 20:21kati1337 schrieb:
I have already signed two general contractor contracts, and neither of them included a clause about a deadline for the fixed price.
I find that unprofessional, especially considering the explicitly short period of 12 months in your contract. I find that surprising. How is he supposed to maintain the prices then? Especially in today's market...
MSHausbau schrieb:
Okay, you are right. It probably wouldn’t be wise to go straight to a lawyer and court. Having the right on your side and actually winning a case are two very different things. Issues that seem clear-cut from one’s own perspective can lead to years of legal disputes, which become quite costly.
What I’m currently witnessing with a friend—though not in housebuilding but in a divorce case—is unbelievable. I would think very carefully before going down that path.
MSHausbau schrieb:
I find that surprising. How does he expect to maintain prices? Especially in today’s climate… Our general contractor (GC) didn’t have any fixed price periods in their contracts, and this is still the case in current agreements.
X
xMisterDx6 Oct 2022 20:24MSHausbau schrieb:
Okay, you’re right. It probably wouldn’t be wise to involve a lawyer and go to court immediately. But I also don’t see why I should pay more for the whole house. I want to pay only for the trades or the items in the payment schedule that are still outstanding. Unfortunately, there are no court rulings on this matter yet. Otherwise, many clients would basically be at the mercy of the general contractor after the fixed-price period ends.
I’ll try to sort it out reasonably over the phone tomorrow.
I’ll also post the ruling from the Higher Regional Court of Hamm tomorrow. Maybe someone here can make better use of it or explain how it could be applied.
Thanks for the advice anyway 🙂 Do you know that King of Queens episode where Doug drinks vodka with the mold removal company and makes a fool of himself to get them to come back and finish the work? That’s basically what you should imagine.
Talk calmly to the boss and make it clear that your money isn’t unlimited and this is not a small amount to just brush off. You’ll probably get much further with a calm approach and some empathy than with a lawyer, shouting, or a Higher Regional Court ruling that you, as a non-expert, probably don’t fully understand.
Keep in mind:
Even if you are right, it can take years to win a final court decision. By then, the general contractor might not even exist anymore... It’s quite possible that some companies won’t survive this crisis. Can you afford to drag out a legal battle for years? Do you really want that?
kati1337 schrieb:
I have already signed two general contractor contracts, and neither of them included a clause about the expiry of the price guarantee.
I consider that unprofessional, especially since your contract explicitly specifies a short period of only 12 months. MSHausbau schrieb:
I find that surprising. How is the contractor supposed to maintain the prices? Especially in today’s market... I think it’s exactly right, since the construction law already stipulates that the contractor can exit the price guarantee if enforcing it would be unreasonable due to increased costs. However, in that case, they must disclose their cost calculations.