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 |  Dr. Dieter Jasper, LL.M.

Compensation for Damages in Case of Construction Defects - Action for Advance Payment

In a previous blog post, we explained how to proceed as a purchaser when construction defects become apparent. In today's article, we would like to deal with some questions that regularly arise when enforcing claims for construction defects:

Setting of a Deadline

First of all, the purchaser should request the contractor to remedy the defects within a fixed period of time. In addition to this claim for supplementary performance (§ 634 no. 1, § 635 BGB), the orderer can demand compensation for the damages he has already suffered (§ 634 no. 4 BGB in conjunction with § 280 para. 1 BGB).

Removal of Defects by the Purchaser

If the contractor remedies the defects properly, all is well. However, if the contractor does not remedy the defects within the set time limit (or if a time limit is not required), the client can have the defects remedied himself (and pay for it) and sue for reimbursement of the costs incurred by the remedy.

Action for Advance Payment

Instead, the purchaser may also demand an advance payment for the expected costs of remedying the defect (§ 634 no. 2 BGB, § 637 BGB). He will do this if he either does not want to use his own funds or if he does not have the necessary money to remedy the defect. And this is where the first hurdles of an action for advance payment become visible: The buyer must be aware that he must present very precisely what he would also have to present when asserting a claim for reimbursement of costs. He cannot simply make a rough or general statement because it is an advance payment. The client has a duty towards the contractor to precisely calculate the damage. Damages cannot be assessed on the basis of fictitious costs of remedying defects (see BGH ruling of 22 February 2018, ref. no. VII ZR 46/2017).

Frequently asked Questions

What if an expert report is not necessary?

If that is the case, the client must provide evidence of the contract for work and services and explain and describe the defects and the costs of remedying them. However, the client does not have to call in an expert who submits an extensive expert opinion in which the costs are substantiated in detail. The client does not have to submit cost estimates either. He can estimate the costs himself. In practice, however, it is advisable to request and submit quotations from contractors. In doing so, it must be ensured that these offers also refer to the specific remedy of the defect and that the offer does not include measures that have no relevance to the remedy of the defect.

What about the amount of the costs incurred for remedying defects?

The amount of the costs of remedying defects must be conclusive. Lump sum offers and offers for work on an hourly rate are also admissible if they are described in concrete terms. If the purchaser has estimated the costs of remedying the defect, the submission of evidence in the form of an expert opinion is generally sufficient to assert the claim in court (BGH ruling of 8 May 2003 - VII ZR 407/01).

What if the advance payment is too low? Is a subsequent claim possible?

If it turns out in the course of the ongoing construction procedure that the advance payment was set too low, the client can in principle demand an advance payment. However, he must then provide sufficient evidence to show why a higher advance payment is necessary.

The client cannot demand an advance on costs if he does not want to or cannot remedy the defects. This applies, for example, if he has sold the building in the meantime. He can also no longer demand an advance payment if the defects have long since been remedied.

In Conclusion:

The client is well advised to contact an architect and/or lawyer if any defects occur, in order not to make any mistakes in enforcing his claims, which could end up being very expensive.

Düsseldorf, the 28th of July 2022

Author: Dr. Dieter Jasper

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