ᐅ Semi-detached house: two contracts (landowner and construction company)
Created on: 17 Jun 2021 18:55
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HubiTrubi40
Hello everyone,
it’s me again... but you advised me so well last time that I backed out of my last house purchase attempt (rightly so!). Now I have something new, and here too there seem to be one or two potential pitfalls. It is a semi-detached house (a total of 12 are being built). The seller is a real estate agency. The land belongs to an investor and is being legally divided. There will be two contracts: one with the landowner for the purchase of the land and one with the construction company (contract for work). The notarized purchase contract covers the total price package (just over 600,000 plus additional costs). Since this is a so-called initiator model (never heard of it before, but according to the marketer it is common), extras can be added afterwards—for example, an additional bathroom. These costs are then charged separately and added on, with so-called layout variants offered. The advantage is that property transfer tax and notary fees are only calculated on the base package. The savings are limited. Depending on the chosen variants, the price increases by another 15,000-20,000, depending on what you want.
I spoke with a lawyer who advised me to stay away. Why? Because you sign two contracts and could face difficulties deciding from whom to claim warranty if something goes wrong. What do you think? The company seems reputable, and my impression is that this is a common approach, but apparently it is not a developer in the usual sense. Anyway, I’m uncertain whether this is a good idea. I could reserve now. For that, I would have to pay 1,000 euros, which I would get back if I withdraw from the reservation within four weeks. These four weeks are intended for clarifying financing, further consultations and planning discussions, and the notarization appointment. Is this reasonable? Otherwise, everything looks okay so far; the house and land are fine (260 sqm (2800 sq ft)). I think building myself (I am still on the waiting list for a building plot) wouldn’t be cheaper, and existing properties are usually just as expensive if not more so. I have an appointment this Saturday to look at a smaller terraced house (125 sqm (1350 sq ft) versus 140 sqm (1500 sq ft) like in this offer). First, it is considerably older and the price is also around 600k. Oh, one thing that surprised me about this offer: the construction period from the start of building (planned from September—planning permission should already be granted) is 20 months. That seems quite long to me. So moving in would only be possible in about two years.
Best regards, Hubi
it’s me again... but you advised me so well last time that I backed out of my last house purchase attempt (rightly so!). Now I have something new, and here too there seem to be one or two potential pitfalls. It is a semi-detached house (a total of 12 are being built). The seller is a real estate agency. The land belongs to an investor and is being legally divided. There will be two contracts: one with the landowner for the purchase of the land and one with the construction company (contract for work). The notarized purchase contract covers the total price package (just over 600,000 plus additional costs). Since this is a so-called initiator model (never heard of it before, but according to the marketer it is common), extras can be added afterwards—for example, an additional bathroom. These costs are then charged separately and added on, with so-called layout variants offered. The advantage is that property transfer tax and notary fees are only calculated on the base package. The savings are limited. Depending on the chosen variants, the price increases by another 15,000-20,000, depending on what you want.
I spoke with a lawyer who advised me to stay away. Why? Because you sign two contracts and could face difficulties deciding from whom to claim warranty if something goes wrong. What do you think? The company seems reputable, and my impression is that this is a common approach, but apparently it is not a developer in the usual sense. Anyway, I’m uncertain whether this is a good idea. I could reserve now. For that, I would have to pay 1,000 euros, which I would get back if I withdraw from the reservation within four weeks. These four weeks are intended for clarifying financing, further consultations and planning discussions, and the notarization appointment. Is this reasonable? Otherwise, everything looks okay so far; the house and land are fine (260 sqm (2800 sq ft)). I think building myself (I am still on the waiting list for a building plot) wouldn’t be cheaper, and existing properties are usually just as expensive if not more so. I have an appointment this Saturday to look at a smaller terraced house (125 sqm (1350 sq ft) versus 140 sqm (1500 sq ft) like in this offer). First, it is considerably older and the price is also around 600k. Oh, one thing that surprised me about this offer: the construction period from the start of building (planned from September—planning permission should already be granted) is 20 months. That seems quite long to me. So moving in would only be possible in about two years.
Best regards, Hubi
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HubiTrubi4017 Jun 2021 20:42@11ant Thank you for your input and the reading recommendations 🙂. I will take a look. I might send you the exposé. Maybe you can assess it. At least it looks quite professional and I believe the companies involved are well-known in the area. If so, by email?
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nordanney17 Jun 2021 21:09HubiTrubi40 schrieb:
I spoke with a lawyer and they advised me to stay away. Why? Because you are signing two contracts, which could lead to issues regarding whom you would hold responsible for warranty claims if something goes wrong. What do you think about this? I don’t see any problems. You buy the land from A and the house from B. B remains your contact for all house-related matters.
This is not an unusual setup. I see it quite often in my professional field—a combined contract: purchase contract with build obligation (and general contractor contract).
I can’t see any reason not to do it.
HubiTrubi40 schrieb:
I could reserve now. For this, I would have to pay 1000 Euro, which I would get back if I cancel the reservation within 4 weeks. That sounds fair!
HubiTrubi40 schrieb:
Oh, and one thing in the offer surprised me: construction time from start of building (planned from September, with the building permit / planning permission presumably already granted) is 20 months. That seems quite long to me. So, moving in would only be possible in about 2 years. That does sound long. It’s probably the latest handover date. I would check whether there is a “planned” and a “latest” completion date.
I see it similarly.
The property transfer tax is paid on both the land and the house. Only the extras are not subject to property transfer tax.
HubiTrubi40 schrieb:
The advantage would be that the property transfer tax and notary fees are only charged on the basic package.
The property transfer tax is paid on both the land and the house. Only the extras are not subject to property transfer tax.
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HubiTrubi4017 Jun 2021 21:57@K1300S What are extras? This refers to things like an additional bathroom or an extra wall.
HubiTrubi40 schrieb:
If yes, by email? That’s how I wrote it ;-)
nordanney schrieb:
I don’t see any reason why that shouldn’t be done. I think @saralina87 can explain that best in this forum.
K1300S schrieb:
The property transfer tax is paid on the land plus the house. Only the extras are not subject to property transfer tax. I already see the line crossed from tax avoidance to tax evasion. When there are three or more people involved, criminal law refers to that as a gang ;-)
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