Construction contract before building permit?

Hello everyone,

I am hoping for answers to some questions regarding the topics of building permits and construction contracts. The situation is a bit complicated. Fortunately, any mistakes we have made can still be reversed.

We are currently looking for a building plot and have signed a contract with Town & Country to support us in the search for a plot. Additionally, they are raising prices by a few percent in May, so it would also become more expensive. It has become clear to me that this was not a good idea. However, the 14-day cancellation right is still valid until 06.05., so we can undo this mistake.

But now step by step:

On 22.04. we signed the contract with Town & Country. On 23.04. an ad for a plot was published. The Town & Country representative made us aware of this. However, the plot still needs to be divided. There is no development plan. There is an old but still valid building inquiry. However, it applies to a semi-detached house. We would like to build a detached single-family house after the division. The second half of the plot would be bought by the Town & Country representative and later be built on with the second detached single-family house.

Our idea was:

Next week, coordinate with the building authority to see if a division and development with two single-family houses would be possible. This would of course only be a non-binding statement. Ask the representative if the technical manager considers the planned development feasible.

If both answers are yes: buy the plot, do not cancel the contract. If either is no or the cancellation period is about to expire: do not buy the plot, cancel the contract.

My questions are:

1) When buying a "standard" house, whether solid or prefabricated, usually the construction company files the building application, right, or is that not the case? Otherwise, one would always take the risk with every construction contract that the city might reject it. You would be stuck with the plot and might have to pay a 10% "penalty."

2) In your opinion, should we definitely withdraw from the contract, even if the city gives positive feedback and Town & Country informs that they could build on it? Actually, after such feedback, we would then sign the construction contract anyway, or is the sequence different?

As mentioned at the beginning, I know it was unwise to sign the contract. I do not need explanations on that. I also know it might be tight to get feedback from the building authority and the technical manager next week. If it becomes too tight, we will cancel the contract anyway.

Thank you very much in advance!

Time pressure is never a good advisor.

To securely clarify the question of construction within a week is impossible. Everything else, subdivision that is also legally secure, forget it.

What if the representative can no longer remember his statement? Or you buy together, joint liability, and he doesn't get the money?

Terminate the contract. Period.

If it's interesting, clarify the property cleanly, then sign.

Always this rubbish with the property service.

Cancel contract.

My only comment: cancel contract, first look for a property (all providers have no pool of properties and are waiting for you), then construction contract.

And afterwards, completely reconsider who you build the house with. Depending on the plot or situation, a different company may then also be an option.

Thank you very much for the quick responses!

We have just decided to revoke the contract in any case. Even if the prices increase in the meantime, it is still below the contractual penalty that we might have to pay. If the gentleman from Town & Country is still interested in this project, he will either accept it or be upset, then there will simply be no cooperation with Town & Country.

Nevertheless, once again the question of what the process would look like after revocation.

Reserve the property, if possible, and submit a building inquiry? Then buy and divide the property (it was intended from the beginning not to purchase the properties jointly and severally)? Then sign the contract?

I have the feeling that buying a property for which there is no development plan is always a risk.

Thank you again!

No, the risk here lies within yourself. You want to buy a plot of land and develop it, for which there is a positive building pre-approval for a semi-detached house (for the entire plot) unless you mean something else. But you want to split it for 2 single-family houses. That’s a completely different matter.

You would only buy a partial plot if anything, and whatever the seller does with the other part would then be his problem. The question is whether he will cooperate.

In any case, this must be put on a solid footing, everything else would be bingo-lotto.