ᐅ General contractor requests price increase for the entire house

Although it is naturally frustrating for everyone, this is not fraud but simply the current market situation. The general contractor (GC) also has to buy materials at the increased prices. And even if you rely on your contract, what happens if the GC goes bankrupt? Then you are left with a house in shell condition, which would presumably cost 30-40% more to complete with another GC, or you would have to tender the trades yourself and still end up with those amounts. It is better to agree on an additional 20,000-25,000 (currency) now and see it through. It doesn’t help to worry about who is legally right at this point, since you want a finished house before there is a wave of insolvencies in the construction industry, because the high prices not only wipe out all profit margins but also lead to losses.

xMisterDx schrieb:

Since this has already been a long ordeal... signed at the end of 2019, hoping for a quick development of the building area.

Oh. Signing the contract without having a finished building plot was certainly not the smartest idea.

xMisterDx schrieb:

2021 was really the worst year to start building... or in our case, not to start on time...

Maybe for you personally.
I wouldn’t want to be in the shoes of the homeowners who had to decide or will have to decide this year.

xMisterDx schrieb:

Sure. Just tell the general contractor, "Look, I’ll handle the rest myself. You’ve already been paid enough, I think."

Well, before the money is gone and the roof gets damaged too, I’d rather choose the lesser evil. If a lawsuit is already in progress, you might as well include that as well.

K a t j a schrieb:

The acceptance of individual trades or the entire contract plays no role whatsoever in the occurrence of additional costs and, in my opinion, has no impact on enforcing higher costs. The real question is whether exceeding the deadline for the fixed price can automatically lead to an arbitrary price adjustment? [...] One must be able to assume that the price was cost-covering for the general contractor (GC) up until day X. After day X, it no longer is. Accordingly, the GC must break down the costs.

That the original poster is mistaken in considering the current construction status as “settled” is significant. However, I agree with you that the GC should still treat this so-called “past” status as a fictional “reading date” if everyone wants to act properly and cooperatively. Legally, there will likely be a clear assignment of responsibility, meaning the loser will be the party that was less attentive when drafting the contract. At least one of the contracting parties probably did not consider what should apply if the work is not completed within the planned timeframe. If the contractor has not accounted for the risk of price increases sufficiently, then one would have to resort to statutory law as a fallback (here: building code). The gap in the contract is, of course, best resolved by voluntary agreement for the benefit of both parties. The law can often be applied without court intervention. ;-)

Bardamu schrieb:

Generally speaking, if I buy a house and the contract states a fixed price with the corresponding services to be provided for that price, I would assume that the materials for this house have already been paid for and are on hand at that time.

At the very least, you can assume that price increases are not your problem. Based on the limited information we have about the specific case, my assessment is that both parties were probably careless when drafting the contract. Accordingly, I would expect a court ruling to be similar to the result of mediation, applying the law voluntarily.

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Late reply from me. Today was a bit hectic… but an interesting discussion has developed here. I like that.
So, the result of the phone call wasn’t really satisfactory. He explained his point of view (which I understand), and I explained ours… I also played the sympathy card a bit. The outcome is that he will review the numbers again next week, and I think we will agree somewhere between 15,000 and 25,000 (USD equivalent). It’s frustrating but not a disaster. Neither of us wants a legal dispute that would only become unnecessarily expensive for both sides.

In conclusion, we can say that we were foolish, young, and naive when signing the contract. We have to admit that mistake.
I was also too optimistic regarding the 12 months. I thought everything would go faster. But the authorities and the groundwork contractor threw a wrench in the works. I’ve learned from this in case I build again 😀
I am treating the additional payment as a life lesson.
Thanks to everyone for the helpful advice and the nice discussion. I was actually a bit worried before posting. But you all are quite friendly after all 😀

K a t j a schrieb:

Which changes significantly after the contract is signed.
Price changes in existing contracts regularly lead to special termination rights.

Because the fixed price period expires without any definition of what happens afterward, and the contract does not specify that the price cannot change after construction starts or that the trades are individually accepted and invoiced.

You are on the wrong track. Morally, you might be right, but legally, you are not. He ended up with an unfair general contractor, but that doesn’t help now.