Security for tradespeople under § 650f BGB: how to demand it

What security for tradespeople is

Anyone who provides construction services works on credit. So that the right to payment does not fail because of the client’s ability to pay, the law gives the contractor the right to demand security. § 650f BGB replaces the earlier rule in § 648a BGB (old version). The claim also covers additional orders and exists as long as remuneration is still outstanding.

Who can demand security, and from whom?

The contractor under a contract for work (Werkvertrag) is entitled to claim. That includes tradespeople, construction companies and subcontractors. The claim is made against the customer (Besteller), that is, whoever commissioned you.

The claim is excluded under § 650f para. 6 BGB if the customer

1. is a public-law legal entity or a special public-law fund whose assets cannot be subject to insolvency proceedings, or
2. is a consumer and the contract is a consumer construction contract (§ 650i BGB) or a property developer contract (§ 650u BGB). This does not apply if a construction manager authorised to dispose of the financing funds is overseeing the project.

How high is the security?

You can demand security for the remuneration agreed, including in additional orders, and not yet paid, including the related ancillary claims, which are set at 10 per cent of the remuneration claim to be secured (§ 650f para. 1 sentence 1).

Example: 50,000 euros of remuneration is outstanding. The security can be for 55,000 euros (50,000 euros plus 5,000 euros of ancillary claims).

Important:

• Set-off: Claims of the customer that it could set off are disregarded in the calculation, unless they are undisputed or have been finally established by a court (sentence 4).
• Acceptance changes nothing: The claim is not excluded because the customer can demand performance or has accepted the work (sentence 3).
• Right of revocation: Security is also sufficient if the provider of the security reserves the right to revoke its promise in the event of a material deterioration in the customer’s financial circumstances, but only with effect for work that you had not yet performed when the revocation was received (sentence 5).

Which security is permitted?

Besides the general forms of security under §§ 232 ff. BGB (for example a Bürgschaft, i.e. a surety bond), security can also be provided by a guarantee or other payment promise from a credit institution or credit insurer licensed in Germany (§ 650f para. 2). The institution may only pay to the extent that the customer acknowledges the remuneration claim or has been ordered to pay by a provisionally enforceable judgment.

Who bears the costs?

You must reimburse the customer for the usual costs of providing the security up to a maximum rate of 2 per cent per year (§ 650f para. 3). This does not apply if a security has to be maintained because of unfounded objections by the customer.

Setting a deadline and legal consequences

If the contractor has unsuccessfully set the customer a reasonable deadline for providing the security, it can (§ 650f para. 5):

1. refuse to perform or
2. terminate the contract.

If you terminate, you may claim the agreed remuneration, but you must allow credit for what you save in expenses as a result of the termination or earn through other use of your labour, or wilfully fail to earn. It is presumed that you are then entitled to 5 per cent of the remuneration for the part not yet performed.

The deadline must be reasonable. Deadlines that are too short can lead to a legal dispute. Document the demand with proof of receipt.

How to proceed

1. Quantify the outstanding remuneration: contract sum, Nachträge (change orders), interim payments made.
2. Draft the letter: reference to the contract, amount of the security (including 10 per cent), type of security, deadline.
3. Set the deadline and state the legal consequences: refusal to perform and termination.
4. Deliver with proof of receipt (registered letter by hand delivery, messenger, confirmed e-mail depending on the contract).
5. After the deadline expires: refuse to perform or terminate. Do not stop work without a deadline.
6. Settle the account: document the measurement (Aufmaß) and the settlement of the work performed and the work saved cleanly.

Mortgage as an alternative

The security mortgage for construction contractors under § 650e BGB is available to you only if you have not obtained security under § 650f (§ 650f para. 4). Anyone who has security is excluded from the mortgage. Whether a mortgage makes sense in an individual case (for example if your customer is also the owner), have checked legally.

Typical mistakes

• Demanded too late, when the client is already insolvent.
• No deadline set and work stopped anyway.
• Overlooking the consumer construction contract. In that case there is no claim.
• Security demanded in the wrong amount, for example without taking account of amounts already paid.
• Demanded orally. In a dispute you lack proof.

Frequently asked questions

Sources and status

• § 650f BGB – security for construction contractors (checked against the statutory text in the BauWalker corpus)
• § 650e BGB – security mortgage of the construction contractor (referred to only)
• Stand: 19.10.2026. No case law was evaluated on the reasonableness of deadlines or on the effectiveness of surety wording in individual cases.
• Quotations of statutory text are given in translation; the German wording is authoritative.