Reviewing a construction contract: what private project owners must look for

Reviewing a construction contract means systematically checking the draft before signing for unclear specifications, unfavourable payment terms, missing defects liability clauses and liability risks. The BSB/IFB Project Owners' Report 2025 documents an average of 31 defects per private construction project — many could have been prevented through a contract review.⁴

Key points at a glance

• BSB/IFB Report 2025: an average of 31 defects per private construction project — unchecked contracts are the most common trigger
• Since 2018, BGB construction contract law (§§ 650a–650v) has significantly strengthened private project owners' rights — many contractors' contracts still ignore them
• Always check 5 critical points: specification, payment schedule, defects liability period, variation rules, termination
• A specialist construction lawyer charges 200–500 € for a contract review — considerably less than a subsequent legal dispute

Why review a construction contract before signing?

A construction contract governs what is built, what it may cost and who is liable if something goes wrong. Yet many private project owners sign without reading it thoroughly. Time pressure is often the reason: the contractor has a start date, materials have been ordered and the contract “just needs a quick signature”.

The consequences can be considerable. In its contract reviews, the VPB regularly finds that construction contracts contain incomplete specifications, one-sided payment schedules and shortened defects liability periods .¹ The Federation of German Consumer Organisations also confirms that unclear contractual terms are among the most common causes of construction disputes.³ In practice, this means project owners pay more than necessary, have fewer rights than the law provides and lack effective protection when defects arise.

Since 1 January 2018, the new BGB construction contract law (§§ 650a to 650v BGB) has significantly strengthened private project owners' position.² Anyone who knows these rights can specifically check whether the contract respects them. Anyone who does not may sign clauses that undermine their statutory entitlements.

The most common risks in unchecked construction contracts:

• Unclear agreed scope: If the specification is vague, the contractor decides what is built. Departures from your expectations are then charged as variations.
• Excessive advance payments: Payment schedules demanding 80 or 90 per cent of the sum before acceptance leave project owners without leverage over defects. The Federal Ministry for Housing, Urban Development and Building (BMWSB) recommends tying interim payments strictly to construction progress.⁵
• Shortened defects liability: Some contracts reduce the statutory five-year period (BGB) to two or three years. Under § 634a BGB, the five-year period is legally required for buildings.²
• Deemed acceptance: Clauses stating that the building is deemed accepted unless the project owner objects within a few days.
• No contractual penalty for delay: Without a sanction, construction can be extended indefinitely without consequences for the contractor.

A contract review before signing gives you the opportunity to identify and renegotiate these clauses. Often, a specific comment to the contractor is enough to correct unfavourable provisions. Our guide explains how to spot warning signs in the quote itself Warning signs of overpriced construction quotes.

BGB construction contract vs. VOB/B contract: what applies to private project owners?

Two sets of rules may apply to private construction contracts: the German Civil Code (BGB) and Part B of the German Construction Contract Procedures (VOB/B). VOB/B is not a law, but a set of contractual terms that only applies if expressly incorporated into the contract. Since the 2018 reform, legislators have specifically tailored BGB construction contract law to private project owners' needs.²

What does this mean in practice? For private project owners, the BGB construction contract is the better basis in most cases. It offers longer defects liability, a withdrawal right and an obligation for the contractor to provide a detailed building specification. VOB/B is primarily used in commercial construction. If a contractor presents a VOB/B contract, check carefully whether VOB/B has been incorporated in full. Partial incorporation of individual VOB/B provisions may mean you relinquish BGB protections without receiving VOB/B's benefits.

Note: For a consumer construction contract (§ 650i BGB), the contractor must provide you with a detailed building specification and a binding completion date before the contract is concluded. If both are missing, that is a reason not to sign.

The 8 most important construction contract checks

The following eight points cover the main contractual risks that the VPB and consumer advice centres most frequently criticise in private construction contracts.¹³

1. Specification: is the agreed scope clearly defined?

The specification is the most important part of the construction contract. It defines exactly what will be built or renovated, using which materials, to what quality and to what extent. A good specification reads like step-by-step instructions: every task, material and surface is named and measurable.

Warning sign: Wording such as “complete plumbing work” or “electrical installation as required”. Such descriptions leave open what the price includes. According to DEKRA, a construction contract specification should be precise enough for every item to be measurable and verifiable.⁶ For a bathroom refurbishment, for example, it should clearly state whether removing old tiles, waterproofing under DIN 18534⁷ and tiling up to the top of the shower screen are included.

2. Remuneration and payment schedule

The payment schedule governs when each portion of remuneration falls due. Since 2018, § 650m BGB has stipulated that, for consumer construction contracts, the first interim payment may only be demanded after work begins, and the sum of all interim payments must not exceed 90 per cent of the agreed total remuneration .² The remaining 10 per cent is only due after acceptance.

What to look out for: Contracts demanding 30, 40 or even 50 per cent on award, before any work has been performed. This gives the contractor no incentive to work quickly and without defects. In the worst case, the money is lost if the firm becomes insolvent. Use interim payments that correspond to actual construction progress.

3. Construction period and dates

Every construction contract needs a binding schedule. Without specific start and completion dates, the contractor has no incentive to meet deadlines. For consumer construction contracts, § 650k BGB requires the contractor to state the expected completion date.²

Practical tip: Agree a contractual penalty for delay. Typical rates are 0,1 to 0,2 per cent of the contract sum per working day, up to a maximum of 5 per cent overall. Without such a clause, delays leave you with the cumbersome route of claiming damages, which you first have to prove.

4. Defects liability

The statutory defects liability period is five years from acceptance under BGB and four years under VOB/B.² Some contracts attempt to shorten this period, for example to two years. In consumer contracts, reducing it below statutory periods is unenforceable, but project owners often fail to notice and effectively relinquish their rights because they believe the shortened contractual period is valid.

What to look out for: Does the contract state a specific defects liability period? Does it also cover subcontractors' work? Is it clear how defects must be notified and within what period the contractor must rectify them? All of this should be recorded in writing.

5. Acceptance

Acceptance is the legally decisive point in the construction process. From acceptance, the burden of proof reverses: the contractor no longer has to prove the work is free of defects; the project owner must prove that a defect exists. Formal acceptance with a written record is therefore essential.

Warning sign: Contracts providing for “implied acceptance” or “acceptance through use”. If you move into a flat before the acceptance record is signed, the work may be deemed accepted even if defects remain. Insist on formal acceptance with a written record documenting all defects identified.

6. Security

Under § 650m BGB, consumers under construction contracts are entitled to security amounting to 5 per cent of the agreed remuneration.² This security covers defects liability claims and can be provided through retention from the final payment or a guarantee. In practice, many project owners waive this retention because the contract does not provide for it or the contractor argues against it.

Practical tip: Include the 5 per cent security in the contract. If the contractor refuses, this is a warning sign. Security is your most important leverage over defects during the defects liability period.

7. Variation rules

Variations arise when work is performed that was not included in the original contract. This is essentially normal in construction projects. According to the Chambers of Crafts, variations account for an average of 10 to 15 per cent of total renovation costs.⁸ Problems arise when the contract does not regulate how variations are commissioned, priced and billed. The contractor then decides unilaterally on additional costs.

What the contract should regulate: Variations may only be carried out following a prior written instruction. The contractor must provide a variation quote with a price breakdown before work starts. Variation prices should follow the main contract's pricing basis. Find more on common variation traps in our Guide: avoiding variation costs.

8. Right of termination

Under § 648 BGB, the client may terminate the construction contract at any time. However, they must then pay the full remuneration minus expenses saved.² The contractor, by contrast, may terminate only for good cause, for example if the project owner seriously breaches their duties to cooperate.

What to look out for: Some contracts contain clauses restricting the project owner's termination right or stipulating cancellation fees of 20 or 30 per cent. Such clauses are often unenforceable in consumer contracts, but unsettle project owners and discourage them from exercising their termination right. Check that the contract leaves the statutory termination right intact.

Who reviews construction contracts?

Anyone wanting a professional construction contract review has several options. The table below shows common providers, costs, turnaround times and service scope:

The choice depends on the type of project. For a contractor-led renovation worth 15.000 to 80.000 euros, a digital review is generally sufficient. For a new build with a general contractor contract exceeding 300.000 euros, a surveyor or VPB adviser supporting the entire construction process may make sense. You can find an overview of review options specifically for construction quotes in our Guide: reviewing a construction quote. If you are deciding whether a solicitor's legal review is necessary or a commercial online review is sufficient, our guide helps you choose Reviewing a construction contract: solicitor vs. online review.

Typical contractual clauses that disadvantage project owners

Many construction contracts contain clauses that appear harmless at first glance, but create considerable disadvantages for project owners. Here are the most common patterns criticised by the VPB and consumer protection organisations during contract reviews:¹³

Fixed lump sum with hidden reservations

A fixed price sounds reassuring: you know what you will pay in advance. In practice, however, many fixed-price agreements contain qualifications such as “fixed price subject to actual ground conditions” or “plus any additional work required”. Such wording turns the fixed price into a lower limit. The upper limit remains open.

Countermeasure: Read the fixed-price provision to the end. If restrictions or exceptions are listed, it is not a genuine fixed price. Request a clear breakdown of which services are included in the fixed price and which are not.

Deemed acceptance: “Deemed accepted if...”

Some contracts contain clauses such as: “The work is deemed accepted if the client does not object in writing within 10 days of notice of completion.” Such deemed acceptance provisions remove the project owner's opportunity to record defects at acceptance and demand rectification.

Countermeasure: Insist on formal acceptance with a joint inspection and written record. TÜV Rheinland recommends carrying out every acceptance inspection with an independent surveyor to document defects objectively.⁹ Delete deemed acceptance clauses from the contract or have them declared unenforceable.

Shortened defects liability

Wording such as “defects liability: 2 years” or “defects liability under VOB/B” in a contract otherwise based on BGB. In the first case, the statutory five-year period is halved. In the second, VOB/B's four-year period is introduced even though a pure BGB contract would provide five years. Such reductions are generally unenforceable in consumer contracts, but create uncertainty.

Countermeasure: Ensure the contract explicitly states “5 years from acceptance”. For VOB/B contracts, it is 4 years. Reject anything shorter.

Unilateral right to determine the work

Clauses such as “The contractor reserves the right to use equivalent materials” or “Changes to execution within technical necessity are reserved”. Such wording allows the contractor to change materials or execution details unilaterally without obtaining your consent.

Countermeasure: Delete such clauses or add: “Changes to execution or materials used require the client's prior written consent.”

Frequently asked questions about construction contract reviews

What is the difference between a BGB and a VOB/B contract?

A BGB construction contract is based on the German Civil Code and applies automatically unless agreed otherwise. It gives private project owners 5 years of defects liability, a withdrawal right and an obligation to provide a building specification. VOB/B is a set of contractual terms that only applies if expressly incorporated into the contract. It offers 4 years of defects liability and more detailed variation rules. For private project owners, the BGB contract is generally the better choice.

Can I change a construction contract afterwards?

Yes, if both parties agree. Contract changes should always be recorded in writing as an addendum. Unilateral changes by the contractor are not permitted. As the client, you generally have a right to instruct changes under § 650b BGB, allowing you to request changes to the work. Remuneration is then adjusted according to the actual necessary costs.

How much does a professional contract review cost?

Depending on provider, between 79 euros (digital review by Cleverbauen24) and 714 euros (expert report with site inspection). Consumer advice centres offer contract reviews from 180 euros, the VPB from 175 euros per hour. For a construction contract worth 50.000 euros, a review costing 79 to 99 euros can already prevent several thousand euros in variation costs.

Does the contractor have to give me a building specification?

For consumer construction contracts (§ 650i BGB), the contractor must provide the client with a detailed building specification before concluding the contract. Among other things, this must include the building's essential features, the type and characteristics of materials used and the expected completion date. This obligation does not apply to simple trade contracts (e.g. painting), but you should still insist on a complete specification.

When should I have the construction contract reviewed?

As early as possible, and always before signing. Ideally, have the draft reviewed as soon as you receive it from the contractor. This leaves enough time to ask questions, delete clauses and renegotiate. Anyone signing under time pressure almost always overlooks unfavourable provisions.

If you would also like to check prices and services in the quote alongside the contract, take a look at our Guide: reviewing a construction quote and the article on Avoiding variation costs.

Sources

1. VPB, Verband Privater Bauherren: construction contract reviews and advice for project owners
2. BGB construction contract law, §§ 650a to 650v BGB, § 634a BGB (since 01.01.2018)
3. Federation of German Consumer Organisations: building and housing, contract review
4. BSB, Bauherren-Schutzbund e.V.: analysis of private construction projects, defects statistics
5. BMWSB, Federal Ministry for Housing, Urban Development and Building: guide for private project owners
6. DEKRA: quality control during construction and contract review
7. DIN 18534: waterproofing of internal spaces, German Institute for Standardisation
8. German Confederation of Skilled Crafts (ZDH): estimating principles in construction trades
9. TÜV Rheinland: building work acceptance and quality assurance in building construction