Key handover only after acceptance and full payment?

Hello,

we have purchased a new build apartment and now the acceptance is imminent.

The developer now writes that BEFORE acceptance the complete final payment must be transferred and received, otherwise there will be no handover of the keys (still outstanding are installment l) 8.4 % "after readiness for occupancy and simultaneously against transfer of possession" and installment n) 3.5 % after full completion.

For installment n) we will receive a bank guarantee according to the purchase contract amounting to 3.5 % of the purchase price:

"The last purchase price installment is due upon readiness for occupancy and transfer of possession, if the buyer has been handed a guarantee certificate which can only be reclaimed by the seller after full completion and correction of the defects noted in the handover protocol. The guarantee certificate must be issued by a credit institution in accordance with the provisions of the [Makler- und Bauträgerverordnung]."

However, we have the problem that there is a relatively long list of defects and there are still some unperformed services such as

1 balcony / so far only bitumen membranes
2 missing outdoor water tap in the terrace area (stated in the building description, the developer forgot it and now has to clarify how it can still be done)
3 outdoor area in the terrace area not filled up
4 missing bridge to the terrace
5 rectification of the defects according to the defect list

Furthermore, the stairwell and the underground car park are still unplastered, the access to the house is not yet finished, the outdoor area not landscaped, the garbage hut too small, etc.

Do we have the option, in addition to the bank guarantee for installment n) (which in my opinion is not really useful to us), to withhold part of the money, e.g. from installment l) 8.4 %, in order to have leverage – or can the developer then refuse to hand over the keys?

Thank you very much for helpful answers!

Best regards
Katrin S.

Here is the passage from the purchase agreement regarding acceptance:

VI.

Acceptance, Transfer of Possession

1. The contractual parties mutually agree to acceptance after the contractual object has been completed ready for occupancy. This applies to common property only insofar as it lies exclusively within the area of the purchaser’s separate property or is assigned to the purchaser for exclusive use. Other common property shall be accepted after complete completion. Outdoor facilities and other work to be carried out only after completion ready for occupancy shall be accepted upon completion.
A joint inspection of the contractual object shall take place during acceptance. An acceptance protocol must be prepared, in which any missing services and defects are to be recorded, even if there is a dispute about them.

2. Possession and use shall transfer to the purchaser from the point in time at which the purchaser is entitled to use the contractual object due to handover. From handover, as well as in the case of early use from the start of use, all burdens, in particular ongoing taxes and public charges, the risk of accidental loss and accidental deterioration, as well as the obligation to ensure traffic safety, shall transfer to the purchaser. The seller is obligated to hand over the property when acceptance has taken place and the purchaser has made all payments due at that time or makes them simultaneously against handover, in particular the occupancy-ready installment.

Hello Katrin,

Do we have the possibility, in addition to the bank guarantee for installment n) (which in my opinion doesn’t really help us), to withhold part of the money, e.g. from installment l) 8.4%, in order to have leverage – or can the BT then refuse to hand over the keys?

Did you conclude the contract under the Building Code or VOB?

Kind regards

In the purchase contract, a few paragraphs from the Baugesetzbuch appear – VOB is nowhere mentioned in the KV ...

"acting not in his own name, but in his capacity as sole authorized representative and managing director of the company ............... who is also exempt from the restrictions of § 181 Baugesetzbuch this party also acts not in its own name, but in its capacity as sole authorized representative and personally liable partner of the company, exempt from the restrictions of § 181 Baugesetzbuch"

"To secure the purchaser's claim to the transfer of ownership of the sold real estate, the contracting parties grant and apply for the registration of a priority notice in accordance with § 883 Baugesetzbuch in favor of the purchaser in the specified legal relationship to the contractual real estate, ranking after any encumbrances mentioned in Section I, in the land register."

"The authorized representatives are exempt from the restrictions of § 181 Baugesetzbuch as far as possible. The power of attorney is revocable and transferable. It also applies to the universal successors of the principal."

"The purchaser expressly agrees that the first administrator will be appointed by the seller for a period of 3 years and that the seller will conclude an administrator contract with this administrator. The seller is exempt from the restrictions of § 181 Baugesetzbuch in this regard. The purchaser enters into this contract and must, in case of a sale, also have the consent of every legal successor declared herewith."

VI.
Acceptance, Transfer of Possession
1. The contracting parties mutually agree to accept the object of the contract upon its readiness for occupancy. This applies to common property only insofar as it is exclusively within the area of the purchaser's private property or assigned to the purchaser for exclusive use. Other common property must be accepted after complete completion. Exterior facilities and other works to be carried out only after readiness for occupancy are accepted after completion.
A joint inspection of the object of the contract shall take place during acceptance. An acceptance protocol must be prepared, recording any missing services and defects, even if there is a dispute about these.
2. Possession and use pass to the purchaser from the moment the purchaser is allowed to use the object of the contract as a result of handover. From the handover or, in case of early use, from the start of use, all burdens, in particular ongoing taxes and public charges, the risk of accidental loss and accidental deterioration, as well as the obligation to ensure traffic safety, pass to the purchaser. The seller is obliged to hand over when acceptance has been carried out and the purchaser has made all payments due at that time or simultaneously against handover, in particular the occupancy readiness installment.

Hello Katrin,

A few paragraphs from the Building Code appear in the purchase contract - VOB is nowhere mentioned in the contract ...

In advance – I am not allowed to provide legal advice here, as this is exclusively reserved for lawyers in Germany.

Based on the passages you provided, I cannot determine whether the Building Code or the VOB underlies the purchase contract. Unfortunately, I also cannot make a definitive statement about which applies in case of doubt, as courts have issued different rulings in comparable cases. In my opinion, it is likely that the VOB applies, especially since you signed to transfer the final payment before handover of the keys. This usually also means, unfortunately, that you have no leverage to withhold the payment or to reduce any further payments.

I would recommend involving an expert as a mediator; a lawyer would harden the positions at this stage. Incidentally, the expert – by virtue of their proven expertise – often has the ability to bring calm to the contractual relationship and thus also lead the construction project itself to a mutually satisfactory conclusion. If you contact the Energy Agency BW, they will provide you with competent contacts; the same applies to the responsible Chamber of Architects.

Kind regards