Land with ground lease - new construction after demolition - who pays?

A pleasant good evening
First of all, I am glad that I came across this forum. For many questions that (possibly) will arise in the next few months, I can certainly find the answers here!

In advance, I have already used the search function but did not find a suitable topic. So now I am starting my own.

We have the option to build on a plot of land with [Erbpacht]. The original plot belongs to the church, passes to an investor, and we could then get it at the [Erbpachtzins]. The investor, a construction company, is developing the entire site. Two apartment buildings, two single-family houses. We would like one of the latter. However, there is currently still the church and a bell tower on the site and, of course, some greenery. What about the costs for demolition and preparation of the building ground? Are these included in the development costs and thus at our expense? Or are these expenses that the investor has to bear before the plot can be released for construction?

I do not want opinions on the topic of [Erbpacht]. We have already dealt sufficiently with risks, disadvantages, and lease vs. purchase. It is now about how much additional construction costs might still be incurred by us, as we are planning our financial framework.

Thank you in advance for possible answers.

Best regards,
samean

You are buying (as I understand you) a piece of the house from the investor = developer. He will carry out the demolition, which YOU will, however, pay for.

Hi,

this here:

Der Investor, ein Bauunternehmer, bebaut das gesamte Gelände. Zwei Mehrfamilienhäuser, zwei Einfamilienhäuser. Eines der letzteren hätten wir gerne.

indeed sounds like the classic developer. That means you buy a finished house on a plot of land. What he has to do for that is his business and his problem. But he will factor it into the price, so you will have to pay for it.
There should actually be a fixed price for the house in the purchase contract and that’s that.

If you yourselves have to pay for the development, then it’s actually no longer a developer, then you’re practically bringing the land with you.

Have you already discussed that with the investor?

Best regards,

Andreas

If you have to pay for the development yourselves, it's actually no longer a developer, then you are practically bringing the land yourselves. Andreas

This is not so unusual with developers: water connection, telephone connection, and gas connection have to be paid for separately. Take a look at the construction service description to see what the developer provides. Everything that is not listed there you have to pay for yourself.

Thank you for the quick responses. We are building through the investor. That means we are planning together with him, and he provides us the shell construction up to the interior plaster. The rest would be done by ourselves since we have all the skilled workers within our family and circle of friends. The construction we envision is at 240,000, according to their statement. Minimal changes need to be made in the room layout; otherwise, the house has already been built by them in this form, and that's why they could already give us the costs.

In the description of the construction service, the following is stated regarding the plot/site setup:
We assume that the building plot is surveyed and cleared of growth and debris...

Since the plot remains in the hands of the investor, theoretically he would have to prepare it at his own cost, right?! I assume it has already been surveyed since a detailed development plan with dimensions exists.

We have not yet discussed this with him. The whole matter will be clarified at the end of February. Then the investor’s development plan will first be officially approved. I just don’t like calling people for every little thing because I don’t want to annoy them, and in the end, they get so fed up with us that they prefer another interested party. That’s why I’m grateful for forums like these and the nice people who know their stuff.

Best regards

Hello seaman,

you have to clarify that. Who is meant by "we" in the construction description? You as the builders or the developer? In my opinion, the description does not fit your case, so please check:

[*]Subdivision of the property (definitely check if this has already taken place! - a drawing in the development plan is NOT a criterion for this, the only certain thing is a current official map extract!)
[*]If not yet done, who orders/pays for the subdivision of the property?
[*]Are you the property owners/leasehold rights holders at the start of construction? Or do you only buy the entire object including the land after completion?

I assume that the construction description means that you initially acquire the subdivided property or become leasehold rights holders there, and the developer then carries out their work on the property that you have (!) cleared and prepared. If I am wrong, that would be good for you, but initially I understand it that way. So please check/clarify.

Best regards
Dirk Grafe