Hardly any houses in Germany are currently being completed on time
There are various reasons for this - and some of them may entitle builders to withdraw from the purchase contract.
Builders throughout Germany are currently having to prepare for construction delays. The ongoing coronavirus pandemic and the war in Ukraine are causing material and personnel bottlenecks.
The result: the completion date is postponed - often to such an extent that builders consider withdrawing from the purchase contract. But is this possible and sensible?
Design of the purchase agreement is decisive
Many contracts contain a completion date for the agreed work.
However, this can be formulated in different ways. Sentences such as "The construction work will be completed by 23.05.2024" leave little room for interpretation. In this case, construction must be completed by the agreed date - otherwise the developer will be in default.
However, many contracts also contain a so-called "determinable date". This includes formulations such as "The construction work shall be completed within 7 months of the building permit being issued". The special feature: Such a deadline is postponed due to obstructions and interruptions (e.g. bad weather, public holidays). Often by several weeks.
When does default occur?
The wording in the purchase contract is important, as the developer is only in default if the fixed completion date has been exceeded. It is then necessary to set a reasonable grace period for the outstanding work.
Only when this period has expired can builders withdraw from the purchase contract and/or demand compensation. Including any relocation or hotel costs incurred through no fault of their own.
A personal conversation helps to clarify the situation
If there are delays, clients and contractors should agree on a new completion date. On the other hand, experts advise those affected not to withdraw from the contract. This is because the interest in accepting and keeping the building at a later date often prevails. This applies in particular to construction projects that are already well advanced.
The builder-owner must nevertheless be compensated for any damages incurred - the so-called delay damages. This applies, for example, if the client actually wanted to rent out the property but is unable to do so due to the delay in construction. Additional commitment interest for the construction loan and other financial disadvantages can also be claimed as damages caused by delay.
