2026-10-10 11:39

What is a forward deal, and how is the buyer's money protected?

A forward deal is the purchase of a supermarket still under construction: the contract is signed in advance, and the price is paid either in full after completion or in instalments during construction. The first option protects the money best: payment only after completion, handover of the store and registration of the buyer's priority notice (Auflassungsvormerkung) in the land register. If the developer is paid earlier, the Brokers and Developers Ordinance (MaBV) requires either four conditions to be met, with at most seven instalments, or a bank or insurer guarantee for all repayment claims (§§ 3, 7 MaBV).

The strongest protection is not to pay until the store is ready

If the whole price is paid after completion, the developer builds with its own or the bank's money, and the MaBV payment rules have nothing to regulate (see Part 6 of the series German Prime Retail). Protection then comes from the contract. In our experience, the price falls due once the building is complete and accepted, the store has been handed over to the tenant and rent has started. The priority notice must also stand at the agreed rank, and the release of the plot from the charges of the developer's bank must be secured. The notary confirms that the conditions are met with a due-date notice (Fälligkeitsmitteilung), after which payment is usually due within 10–14 days.

The buyer's risk here is time, not money paid. If construction drags on, or the tenant withdraws from the lease after a long-stop date, the buyer has paid nothing and leaves the deal on the contract's terms. A discount for such a purchase is harder to negotiate: the developer finances construction itself, so there is no saving on a construction loan to share (Part 6).

The law allows earlier payment only once four conditions are met

If a developer sells a plot together with a building still to be built (§ 650u BGB), four conditions must be met before the first payment (§ 3(1) MaBV):

the contract has taken effect, the notary has confirmed this in writing, and the developer has no right to withdraw;
the priority notice has been entered at the agreed rank;
the release of the plot from the charges of the developer's bank is secured, including in case construction is not completed;
the building permit has been issued.

The money then flows in no more than seven instalments as work progresses: 30% once earthworks begin, the last after full completion (§ 3(2) MaBV). Alternatively, the developer can take money earlier against a bank or insurer guarantee for all repayment claims, valid until the conditions are met and the property is fully completed (§ 7(1) MaBV). A schedule that departs from the MaBV to the buyer's detriment is void, and the price then falls due only on acceptance (BGH, judgment of 22 December 2000, VII ZR 310/99).

Exhibit 1. The later the money leaves, the less the buyer loses if the project fails

Payment method	When the money leaves	What protects it	What is at risk if the project fails
Full price after completion	After completion, handover and registration of the notice	The money stays with the buyer	Time and deferred income
Instalments under § 3 MaBV	After the four conditions, in up to seven instalments	The priority notice and the secured release from charges	Time and money to finish the building; the developer's bank may repay instalments only up to the property's proportionate value
Guarantee under § 7 MaBV	Earlier, on the contract's schedule	A guarantee for all repayment claims	The guarantor's solvency
Waiver of protection under § 7(2) MaBV	On the contract's schedule	Only the contract with the developer	All sums paid

The priority notice protects the plot, not the money paid

The priority notice secures the claim to the transfer of the plot and survives the developer's insolvency (§ 106 InsO). But a buyer who leaves a stalled project gives up that protection too, and is left with an unsecured repayment claim unless a § 7 MaBV guarantee covers it (Part 6). A buyer entered in the commercial register, such as a German limited-liability company (GmbH), can waive the MaBV protection in a separate document (§ 7(2) MaBV). Our advice is to do so only in exchange for an equivalent guarantee.

In practice, developers sometimes ask for a deposit or proof of financing: a bank letter or the buyer's payment guarantee. That is a negotiating point, not a legal requirement. Money handed to the developer before the § 3 MaBV conditions are met and without a § 7 guarantee is unsecured. The law allows a notary escrow account (Notaranderkonto) only where there is a legitimate interest in security (§ 57(2) BeurkG).

Implications for investors

1. Push for payment after completion. The money then stays with you until the store is handed over and the priority notice is registered, and the risk comes down to lost time.

2. Pay earlier only on a § 3 MaBV schedule or against a § 7 guarantee. The priority notice secures the plot, not the instalments paid.

3. Do not waive the MaBV protection without an equivalent guarantee. A GmbH can waive it in a separate document, and the buyer is then left with only the contract.

What to check:
• the payment conditions in the contract: completion and acceptance, handover to the tenant, rent commencement, the priority notice, the release from charges;
• for instalments, the § 3 MaBV schedule and the notary's written confirmation;
• the wording of the § 7 MaBV guarantee: the guarantor, the amount and validity until full completion;
• whether the documents include a separate deed waiving the MaBV protection;
• the long-stop date in the lease, and the buyer's right to withdraw if the tenant withdraws from the lease.

Sources: §§ 3, 7 MaBV; §§ 650u, 650v, 883 BGB; § 106 InsO; § 57(2) BeurkG; BGH, judgment of 22 December 2000, VII ZR 310/99; the series German Prime Retail, Parts 6 and 8; Gordon Real Estate Group experience. Legal position as of 10 October 2026.

Photo: Jan-Philipp Thiele / Unsplash

This page is general information and not investment, legal or tax advice.

Ilya Gordon