Behavior in case of imminent delay by the property developer

Hello everyone,

we are facing the following situation: We bought a terraced house from a local developer in mid-2022. In the project, besides some terraced houses on an old garden area, a multi-family house with condominiums is also supposed to be built. The plot has been officially divided. The latest handover date according to the contract is 18 months after obtaining the building permit. The developer informed us at the end of 2022 that the construction of the terraced houses had been approved, which results in a handover in May 2024. At the same time, a construction start in March 2023 was mentioned.

Until today, nothing has happened on the plot. No money has flowed either, as payments are made according to the broker and developer regulations. I regularly contact the developer but receive no concrete information, only the promise of an "internal clarification." According to the developer, the construction of the multi-family house was also approved in June 2023, whose rainwater retention basin is to be used by the terraced houses as well. According to the developer, construction is now planned to start in November 2023, which would mean less than 6 months until the turnkey handover. Bathrooms and tiles are also the responsibility of the developer.

In the last phone call, I pointed out the impending delay to the developer’s contact person and also emphasized the risk of damages. A meeting with the managing director of the developer is planned in two weeks. The developer is majority-owned by a bank, so I do not see a risk of insolvency.

So far, only our house has been sold from the project; all other houses and the apartments are listed but have not been sold for over a year. Prices have been reduced minimally (~2%). Our concern is that the developer would rather accept paying damages to us than be stuck with the completed houses.

Do you have any tips on how we should behave in this situation? Are there any possibilities to put the developer under pressure already, or do we have to wait until the delays occur?

Best regards

How many planned, unsold units are we talking about? If >10, I bet they not only want to claim damages, but even have to... As long as a certain proportion is not sold, they won't manage the financing, not even with a bank as the parent company - the guidelines don't allow that at all. And on the other hand, a GmbH founded just for the project is relatively quickly sent into insolvency if sales don't work out and damages threaten.

Hello,

How many planned, unsold units are we talking about?

A total of 4 houses + 12 apartments.

And on the other hand, a GmbH founded only for the project can be sent into bankruptcy relatively quickly if the sale doesn’t work out and damages are threatened.

Our purchase contract was concluded directly with the developer’s GmbH. They are actively building at least 2 other projects where construction activity is also taking place. It should perhaps also be mentioned that the majority of the bank’s stake in the company was only taken over after our purchase. It seems rather unlikely to me that the company would be wound up less than a year after the purchase? The managing director also remained after the purchase...

OK, then your chances are certainly much better, although they probably already factor in your demands anyway...

So far, only our house has been sold from the project; all other houses and also the apartments are listed but have not been sold for over a year.

Oh dear, that doesn't sound good at all. That should basically get tight. But will he even build?

and also emphasized the risk of damages. I

Is damages regulated in the contract?

Hi,

Oh dear, that doesn't sound good at all. It should basically be tight. But will he even build?

The last communication to us was a start of construction at the end of October/November. I have no further information.

Is compensation for damages regulated in the contract?

The contract contains no clause regarding compensation for damages in case of delay. Several reasons for a possible delay are mentioned, strike, bad weather conditions, unavailability of building materials, etc. However, none of these reasons have been registered with us so far. The developer only has a right of withdrawal if the building permit is not granted - but then under the assumption of all incurred costs.

So I assume that the statutory provisions would apply.