Construction bankruptcies in Germany - what can be done?

2024-02-11 14:40:00, Kosova & Bota CNA

"It's not possible: my nightmare has come true, the construction company has started the bankruptcy process. I was sad, very sad." Monika Daniels and her husband received the news by e-mail in May 2019. Until then they had paid just over 300,000 euros for their apartment that was to be built in a new building. construction. The couple was looking for something they could put to good use when they got old. They spent their savings on it, and even sold a home they previously owned.

If a builder goes bankrupt, money is lost. The Daniels remain - in the truest sense of the word - in front of a construction site. The facility remained in the construction phase. The 62-year-old woman has not appeared publicly with photos. She is concerned that it may have a negative impact on the value of her home. But she told us her story anyway.

"No one is interested in continuing the construction"

Many people in Germany currently have the same problems as this couple living near Frankfurt. There are no reliable figures, but construction cancellations have increased significantly. According to the latest data, 21.4 percent of works were canceled in September 2023. This is well above the average level of 3.5 percent, indicating that housing construction in Germany is in deep crisis.

We change places: An old German restaurant. Monica Daniels and her husband were sitting here along with about 60 other affected people, shortly after receiving the news of the company's bankruptcy. The bankruptcy administrator had invited the buyers to a meeting.

"He then said that no one was interested in continuing the building. The only ones who wanted to continue construction were us, the buyers." Monica Daniel stops. She knits her brows over her round glasses and makes a serious face. He takes a deep breath and purses his lips: "It has to be swallowed - the truth was bluntly told to us at the table."

Construction bankruptcies in Germany - what can be done?

Informed in advance about the risks

Before buying, the couple had talked to different banks, friends who were civil engineers, lawyers and informed themselves about the risks. Daniels had a good feeling. Their first building they lived in was also a new construction project.

For Christmas, Monika Daniels' brother gave her and her husband a construction worker's helmet and vest. Actually, it was more like a joke. Now they used it regularly. Entry to the site was actually forbidden, but the Daniels talked to the security people and got in there. After work and on weekends, they documented the construction progress. Where are the electrical cables, the underfloor heating coils, what has happened since the last visit....

delays

The couple noticed that the construction work was progressing slowly. In December 2018, they should have entered the new apartment. But in the fall of 2018, Monika Daniels started to get nervous. The company kept making promises. In mid-April 2019, the news came that there were liquidity problems.

"I was shocked at that moment. I was always worried that the construction company might go bankrupt," recalls Monika Daniels. She had mentioned exactly this risk to the banks before the purchase. They told her not to worry and that the construction would continue with another company if she had problems.

Three weeks later, the company filed for bankruptcy. There will be no further construction, it was said. The fear of being left with an unfinished building was great, says Monika Daniels in an interview for DW. Many sleepless nights and fear of personal bankruptcy followed. Many listened to her stories of troubles, but no one cried, no one panicked.

The administrator gave his proposals for opportunities, management of assets and properties. "It is difficult, because the started projects are not taken over by others", says Danieli. In the end, a firm of architects took over the role of construction managers.

Construction is becoming more and more expensive

Construction bankruptcies in Germany - what can be done?

They were forced to live "like students," Monika says with a laugh. "It really reminded me of when I started my career." While now at this age, she and her husband settled in a basement apartment, with 60 square meters, in front of the new building. "Sometimes we laughed when we dug through the leftover boxes." Humor helped them through this time.

Meanwhile, construction is becoming more and more expensive. Construction prices are rising. Construction requires other investments. Monika works as a press spokesperson. The husband is retired, while previously he was a journalist in a daily newspaper. The money is being spent, so Monika Daniel says: "We had to tighten our belts".

Would he do it again?

The construction of the new apartment cost a total of about 100,000 euros more. There were also other expenses, rent and attorney's fees. Would he do it again? It does not have any correct answer. But she would never again sell her property to buy any new property.

The dream becomes a reality

But on a sunny day in August 2021, the Daniels family moves into the new apartment. Monica Daniels was at work when they got the news. Her husband put the bed in the new apartment and surprised her. In the evening you can watch the sunset over the Taunus mountains from your terrace. But what happened with the husband was a very big vicissitude. However, all the time they tried to encourage each other. Monika accepted the interview with DW because she wanted to encourage people in Germany who are affected by the bankruptcies of construction companies.

In the end, the nightmare turned into a beautiful dream: "Now we have a wonderful apartment and this dream came true"./ DW