Insight

Real Estate Development in Germany

From securing the property and navigating planning and building law to developer agreements, marketing and project handover.

14 August 2026 | Reading time 3 min. | Author: Martin Neupert

For a project to be developed successfully, the areas of land acquisition, planning permission, financing, construction and sales must be closely coordinated so that a delay does not automatically jeopardise the entire time and cash flow schedule. Access to the land can be secured through an immediate purchase, a purchase agreement subject to a condition precedent, an option or a right to purchase. Whether a project is permissible depends on the local development plan, the regulations governing building projects in urban or rural areas, and other requirements under public law. A property development contract under Section 650u of the German Civil Code (BGB) must be notarised. Section 3 of the German Notarial Regulations on Property Development Contracts (MaBV) links payments by the purchaser to security conditions and the progress of construction. Acceptance affects the due date, the transfer of risk, the burden of proof and the commencement of the limitation period. However, it must not be equated with mere handover.

Securing a plot of land without assuming the development risk

Access to the site can be secured through an immediate purchase, a purchase agreement subject to a condition precedent, an option or a right to purchase. Which structure is appropriate depends on how robust the utilisation concept, the financing and the planning permission already are. The developer requires sufficient time for due diligence and planning, whilst the seller needs clarity on how long the site will remain tied up and under what conditions the acquisition will be finalised.

The due diligence process should take into account the land register, planning restrictions, contaminated sites, site development, easements, existing tenancy or usage arrangements, and restrictions under public law. Equally important is the actual availability of the plot. This is because a plot that can be legally acquired may be unsuitable for the project if access, utilities, easements or the building site have not been secured.

If the right to carry out a construction project first has to be obtained or amended, obligations to cooperate, deadlines, costs and exit options should be set out in the property purchase agreement. Municipal rights of first refusal, necessary permits and the release from encumbrances must also form part of the completion mechanism. The purchase price should not become due and transfer of ownership should not take place until the agreed conditions have been met.

Planning law, planning permission and town planning agreements

The permissibility of a project is determined by the local development plan, its classification as an inner or outer area, and other public-law requirements. Before making a binding investment, the types of use for which planning permission can be granted, the permitted building volume, the required parking spaces, the provision of services and the emission limits should be clarified. In the case of existing properties, existing rights, changes of use, fire safety and possible exemptions must also be taken into account.

If a local development plan is required, the local authority sets out the procedure. An urban development contract may regulate planning, development, infrastructure and cost contributions. Such agreements must be coordinated with the land purchase agreement and the financing arrangements, as they may entail significant upfront expenditure and long-term commitments. Building encumbrances, easements and agreements with neighbours may also be prerequisites for approval.

Planning for approval should take subsequent implementation into account. Changes to use, floor areas, technical specifications or development after sales have commenced may affect sales prospectuses and purchase agreements. A controlled change management process prevents discrepancies between the project planning, the building contract and the sales documentation.

Property Development Agreement, Specification of Works and MaBV

A property development contract within the meaning of Section 650u of the German Civil Code (BGB) covers the construction or conversion of a building, as well as the obligation to transfer ownership of the land or a leasehold right. As it relates to land, it must be notarised. Plans, the building specification, rules governing special requests, deadlines and final inspection form a single economic package and must be consistent with one another.

The MaBV sets out the conditions under which the property developer may accept payments from the purchaser. In accordance with Section 3 of the MaBV, payments are linked to security conditions and the progress of the construction work. The instalment schedule should therefore not merely be adopted as a formality, but should be coordinated with the financing, the construction schedule and the actual stage of completion. An instalment that is due too early or is not yet due can place a considerable strain on cash flow planning and the relationship with the purchaser.

Special requests require a separate process. In such cases, the content, price, planning implications, impact on deadlines and acceptance must be clarified before execution. Equally important are provisions regarding deviations in floor area, changes required by the authorities and equivalent materials. The rights to make changes must not be so broadly defined as to render the agreed specifications unclear to the purchaser.

Marketing, handover and commencement of operations

Brochures, websites, visualisations, building specifications and sales pitches shape buyers’ expectations. Statements regarding floor area, fittings, energy efficiency, views, communal facilities or completion dates may have legal implications. Marketing and contractual documents should therefore be based on the same approved plans. Any changes must be incorporated into all documents in a controlled manner.

Acceptance represents the key turning point in the performance of the building contract. It has implications for payment due dates, the transfer of risk, the burden of proof and the start of the limitation period for claims relating to defects. The purchase agreement should clearly set out the procedure, the recording of defects, deadlines for outstanding work and the handling of material defects. Handover and the transfer of ownership must not be equated with acceptance.

In the case of flat-ownership projects, additional considerations include the initial property management, the common property and the handover of documents to the owners’ association and the property manager. Warranty management, technical documentation and insurance should be organised well before completion.

About the author

Martin Neupert

Partners · Property and Procurement

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Martin Neupert has been advising investors and companies on property and company law for over 30 years and supports them in commercial property transactions, property development projects and tenancy agreements.

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Frequently asked questions about project development

How do I secure a plot of land before making an investment decision?

It is possible to secure access via a purchase option or a right to purchase, without having to buy straight away.

What does the MaBV cover?

It protects buyers by linking payments to the progress of the building work and by providing safeguards.

Does a property development contract require a notary?

Yes, it must be notarised.

Are the details in a prospectus legally binding?

Agreements regarding quality may give rise to rights in respect of defects. The details should be checked carefully.

What should I look out for when taking over the property?

Topics include, amongst others, acceptance, rights in respect of defects and the transfer of benefits and burdens.

Real Estate Development in Germany

Securing a plot of land without assuming the development risk

Planning law, planning permission and town planning agreements

Property Development Agreement, Specification of Works and MaBV

Marketing, handover and commencement of operations

About the author

Developing a property project in Germany?

Frequently asked questions about project development

More articles on this topic

Get in touch

Maxfeld.legal

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