ᐅ General contractor requests price increase for the entire house

xMisterDx schrieb:

Well, the main issue with such a legal process is that the general contractor (GC) can drag it out to the very last appeal and repeatedly delay it through various tactics.
This can take years. GCs are not naive; they fully understand that clients face a dual burden that is difficult to sustain financially and emotionally over a long period.

That makes things even more difficult. Even without the GC’s delaying tactics, these kinds of lawsuits tend to last for years. Every level of appeal will naturally do everything possible to achieve the best outcome for their client. Years of stress add to the financial risk.
But I consider the financial risk real and significant. The longer such a case drags on, the more expensive it becomes. I find it hard to imagine that, in this particular case, the decision would be 100% in favor of the homeowners. The contract wording clearly states that the fixed price is time-limited and is unclear about what should happen afterward—at least based on the passages we have seen. And even if the GC doesn’t get everything they want at the end of such a process, they would probably still be awarded something, while the legal costs will almost certainly have to be shared by both parties. A GC can probably absorb that more easily than a homeowner.

Oh, I almost forgot. With the last price adjustment at the end of 2021, the wording was added, roughly meaning “the fixed price now applies until the end of the construction period.”

It’s worth making sure that the general contractor puts this in writing, otherwise you might face the same issue again in a year. Who knows how long the construction will still take.

As long as the general contractor is doing reasonably well financially, they can easily handle a few clients who take legal action. Our electrician once mentioned how many houses of our general contractor he currently has on his schedule... it was around 100.

xMisterDx schrieb:

Roofing was a 4 out of 10 for me.

Roofing doesn’t result in any deduction for me. Normally, it would come right after the roof structure (for which there is a deduction), then the crane can be dismantled. It’s just different everywhere.
I also see that a general contractor has a hard time getting price increases approved in court for work that was carried out as planned (we’re talking about 1–3 months) and is already completed. Meeting fixed pricing within the usual lead times is barely possible. However, I would still try to avoid going to court if possible. It costs a lot of money for lawyers, and you’ll only know what the house really costs in a few years. Until then, you might have to set aside tens of thousands of euros and lose sleep over it.

K a t j a schrieb:

The payment schedule is directly linked to the completion of specific work stages such as the roof, shell construction, etc. The costs mainly arise for the general contractor at the time the work is performed, not only upon later acceptance. Otherwise, the agreed price lock would make no sense and could, in my opinion, be considered unfair or a breach of good faith.

HilfeHilfe schrieb:

I find it difficult to pay a price adjustment retroactively for trades that have already been installed.

The payment schedule is linked to specific completions of sections, trades, or services only provisionally because these dates cannot be precisely predicted in advance, while the installment payment due dates require a clear trigger. Good faith serves merely as the basis for attempting to reasonably quantify the partial amounts according to empirical values of the contract parts fulfilled up to that point. The ideal here is a compensation that, by nature, cannot yet be precisely determined but should not favor either party. A partial acceptance—real or fictitious—is not implied by this, so the assumption that the partial completions named there represent an explicit settlement is incorrect. The payment installments do not transfer ownership of the partially completed work because the entire project was commissioned as a whole—this would require an explicit termination clause in the construction contract at the designated installment payment dates. To consider the classic general contractor home construction contract clever from the client’s perspective is an idea likely only to occur to inexperienced laypersons.
Summary of this section in "plain language":
1. The installment payments up to point x do NOT pay for the construction progress reached until then.
2. The construction contract cannot be terminated at this point without further conditions (and compensation);
the belief that neither side owes anything to the other at that point is legally incorrect.

The agreed price lock of an offer generally fits best with reality when it lasts until completion and acceptance of the work. However, it does not automatically become unfair if it is agreed for a shorter period. Defining events that delay or suspend deadlines is useful but not mandatory. Potential builders should be repeatedly advised not to enter into legal transactions of the scale of a construction contract without expert legal advice. I am a technical business professional with many years of experience and would never have my house built without consulting a lawyer. From reliable sources, I have consistently heard that the “builder’s license” by legal counsel Reibold-Rolinger comes highly recommended.

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But even if you say you have to consider the entire house, I still wonder. If there is a 12-month price guarantee and the house is completed after 16 months, it doesn’t really seem fair to me that the builder should have to pay the full additional cost that would apply under a new contract today. A new contract already includes a buffer for what happens during the construction period, and here the remaining construction time is significantly shorter. Furthermore, I would have hoped that possibly only the increases for the 4 months of delay would be paid, but not the full increase for the entire duration.

I assume (completely unsubstantiated, just a guess) that having a real legal claim in this case looks difficult. It would also be interesting to know how this is handled in other contracts when there is a limited time guarantee (which doesn’t mean that it can simply be transferred, since they are structured differently, but it might give some ideas for argumentation).

The "buffer" calculated by the general contractor (GC) is actually the profit margin.
Basically, everything here has already been said several times.

The installments in the contract do NOT represent partial acceptance of individual trades. Strictly speaking, even the closed shell of the building is not yet completed, since the roof covering is still missing.

And even if one were partially justified, enforcing these claims would be many times more expensive than agreeing on a fixed amount with the GC.

The lawyer who would profit well from such a legal dispute advises against it. What more proof is needed to realize that it’s better to just let it go?