Hello,
About a year ago, my girlfriend commissioned a prefabricated house. After some back and forth with the building plans and permits, construction work was supposed to start this winter. However, for personal and professional reasons, she has now decided not to proceed with building the house and has canceled the contract with the construction company.
Almost all the work completed so far was outsourced and paid for by her. She has now received an invoice from the construction company listing only 3 hours of structural engineer work as actual labor. The largest portions, however, are overhead and profit. Many items are shown with varying percentage allocations, with the profit actually listed at 100%.
In total, the costs demanded by the construction company amount to 15–20% of the total price for the completed house.
She is quite distressed at the moment, so I am trying to find out to what extent this is legally justified and whether there are options to challenge it.
This is definitely not about trying to avoid costs. It is clear that she will not be released from the contract free of charge. But such an incredibly high bill with many fictitious costs, despite almost no actual work having been done so far, and a 100% profit share is hard for us to understand.
Can you help us and provide advice?
THANK YOU!
About a year ago, my girlfriend commissioned a prefabricated house. After some back and forth with the building plans and permits, construction work was supposed to start this winter. However, for personal and professional reasons, she has now decided not to proceed with building the house and has canceled the contract with the construction company.
Almost all the work completed so far was outsourced and paid for by her. She has now received an invoice from the construction company listing only 3 hours of structural engineer work as actual labor. The largest portions, however, are overhead and profit. Many items are shown with varying percentage allocations, with the profit actually listed at 100%.
In total, the costs demanded by the construction company amount to 15–20% of the total price for the completed house.
She is quite distressed at the moment, so I am trying to find out to what extent this is legally justified and whether there are options to challenge it.
This is definitely not about trying to avoid costs. It is clear that she will not be released from the contract free of charge. But such an incredibly high bill with many fictitious costs, despite almost no actual work having been done so far, and a 100% profit share is hard for us to understand.
Can you help us and provide advice?
THANK YOU!
A
Allthewayup16 Aug 2022 20:49Now it is important to determine exactly which contract was signed, or on what basis. Building Code? VOB (German Construction Contract Procedures)?
For turnkey or ready-to-move-in houses, a contract for work based on the Building Code usually applies. According to case law, the contractor can only charge for the services actually performed up to the point of termination. I consider a 100% profit claim to be unsustainable, since the contractor can reassign the construction slot elsewhere and thus does not lose any profit—in the broadest sense. Applying a flat rate of 10% also seems too vague and inconsistent with case law. It will be difficult to prove to a court that B... Z.... is entitled to nearly 100,000 euros when construction has not even started. And even if materials have already been ordered, these can be used on other projects. Therefore, the contractor is obliged to specifically prove the damages and should not rely on flat rates. In my opinion, this is intended primarily to discourage contract termination.
I would not simply make a payment here but rather consult a specialized attorney. Court cases usually end in a settlement, and considering the amount involved for a single-family house, I see considerable potential to negotiate against flat rates.
Don’t get me wrong—I don’t want to take advantage of anyone, but a 100% profit claim as part of a contractual penalty is absolute nonsense. The industry is still functioning reasonably well, and this company can very likely reassign the lost time slot elsewhere.
For turnkey or ready-to-move-in houses, a contract for work based on the Building Code usually applies. According to case law, the contractor can only charge for the services actually performed up to the point of termination. I consider a 100% profit claim to be unsustainable, since the contractor can reassign the construction slot elsewhere and thus does not lose any profit—in the broadest sense. Applying a flat rate of 10% also seems too vague and inconsistent with case law. It will be difficult to prove to a court that B... Z.... is entitled to nearly 100,000 euros when construction has not even started. And even if materials have already been ordered, these can be used on other projects. Therefore, the contractor is obliged to specifically prove the damages and should not rely on flat rates. In my opinion, this is intended primarily to discourage contract termination.
I would not simply make a payment here but rather consult a specialized attorney. Court cases usually end in a settlement, and considering the amount involved for a single-family house, I see considerable potential to negotiate against flat rates.
Don’t get me wrong—I don’t want to take advantage of anyone, but a 100% profit claim as part of a contractual penalty is absolute nonsense. The industry is still functioning reasonably well, and this company can very likely reassign the lost time slot elsewhere.