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Construction safety

How to financially secure commercial construction projects for construction companies and tradespeople

from
Simon Esch
Lawyer
Specialist lawyer for construction and architectural law

Give me a call: 0261 - 404 99 62
E-Mail:

Many building owners are surprised when they are confronted with the topic of builder's risk insurance for the first time – but even construction companies and tradespeople are often unaware that they are entitled to such insurance. Lawyer Simon Esch, an expert in private construction law at caspers mock, explains in our new legal tip video what construction companies need to know about this important security right.

What is a builder's risk deposit?

The building tradesman's security protects the building contractor against a possible loss of payment by the building owner. Particularly in the case of large projects, this can be a matter of survival for the entrepreneur.
The law requires that commercial builders provide security on request – usually in the form of a bank guarantee.

Important points:

• Only commercial builders are required to provide a builder's guarantee. Consumers and public authorities are exempt.
• The building contractor has the right to demand security if he has not yet been paid in full.
• The amount of the security is based on the difference between the contract amount and the payment status – especially early in the project, the sum can be substantial.
• If there is over-security, the client can demand a pro-rata release of the security.

Do you have questions about construction contractor security or are you involved in a dispute over the return of security? Talk to us – our team will be happy to help you!

The statements represent initial information that was current for the law applicable in Germany at the time of initial publication. The legal situation may have changed since then. Furthermore, the information provided cannot replace individual advice on a specific matter. Please contact us for this purpose.