2026-10-10 11:25

What are the risks of buying a supermarket under construction?

The main risks are a delayed or failed build, a tenant who withdraws from the lease once a long-stop date has passed, and defects that surface after acceptance. The Brokers and Developers Ordinance (MaBV) caps what the buyer pays during construction — no more than 58% of the price by the time the shell is complete — but does not ensure completion. The buyer is protected by a statutory payment schedule or a bank guarantee, by vetting the developer and by a legally sound acceptance (Abnahme).

The MaBV limits the money at risk, not the risk of failure

If a developer sells a plot together with a building still under construction (a developer contract, § 650u BGB), it may accept the buyer's money only once four conditions are met (§ 3(1) MaBV):

the contract has taken effect, as the notary has confirmed in writing;
a priority notice (Auflassungsvormerkung) has been entered in the land register;
the release of the plot from the charges of the developer's bank is secured, including in case the building is not completed;
the building permit has been issued.

After that, the price is paid in no more than seven instalments as construction progresses. The schedule allows 30% once earthworks begin, if the plot passes into the buyer's ownership, and up to 58% of the price once the shell is complete (§ 3(2) MaBV). Instead of this schedule, the developer can provide a bank or insurer guarantee covering all claims for repayment (§ 7(1) MaBV). If, however, the full price is paid on completion, or the investor buys the land and commissions the construction separately, the MaBV as a rule does not apply. The contracts are then the main protection (see Part 6 of the series German Prime Retail).

If the developer becomes insolvent, the buyer will have paid only for completed stages, and the priority notice remains effective (§ 106 InsO). But instead of releasing the plot, the developer's bank may repay the instalments paid, up to the proportionate value of the property (§ 3(1) sentence 3 MaBV). Completion by another contractor takes time and money. The priority notice secures the claim to the transfer of the plot, not the money paid: a buyer who leaves a stalled project holds an unsecured repayment claim unless a § 7 MaBV guarantee covers it.

Exhibit 1. Each of the five risks must be closed before signing, not after

Risk	Mechanism	What to agree before signing
Developer insolvency	Payments only for completed stages; the priority notice survives insolvency	A § 7 MaBV guarantee for the return of funds
Challenge to the building permit	The MaBV requires a permit that has been issued, not one that is final	Sign only once the permit is final
Delayed opening	The lease usually lets the tenant withdraw if the store is not handed over by a long-stop date	A long-stop date that fits the construction schedule, and a guarantee for the return of funds if the tenant withdraws
Waiver of MaBV protection	A buyer entered in the commercial register, such as a GmbH, can waive it in a separate document (§ 7(2) MaBV)	A waiver only in exchange for an equivalent guarantee
Defects after acceptance	Five years for claims from the date of acceptance (§ 634a BGB)	Security for warranty obligations, in our experience about 5% of the contract sum

Acceptance is a legal act with three traps

Acceptance starts the five-year limitation period for claims for building defects (§ 634a(1) no. 2, (2) BGB) and passes the risk of accidental loss to the buyer (§ 644 BGB). A known defect not reserved in the acceptance record leaves only a claim for damages (§ 640(3) BGB). A contractual penalty for delay that is not reserved at acceptance is lost unless the contract provides otherwise (§ 341(3) BGB). And if the developer has set a reasonable deadline and the buyer has not refused acceptance by naming at least one defect, the building is deemed accepted (§ 640(2) BGB). So obtain an independent technical consultant's report before the acceptance date.

The risk earns a discount, but the developer is decisive

A buyer who pays in instalments spares the developer much of the cost of a construction loan; in the example in Part 6, the interest alone comes to 2% of a €10 million price. Experienced buyers come to the negotiation with their own estimate of that saving. But in our experience the decisive factor is the developer itself: which stores it has handed over to the same retailer, which defects were recorded when they were accepted, and how quickly they were remedied.

Implications for investors

1. Pay nothing without a § 3 MaBV schedule or a § 7 guarantee. The priority notice secures your claim to the plot, not the money paid: without a guarantee, a repayment claim from a stalled project is unsecured.

2. Negotiate the discount, but choose the developer by its record. Above all, check which stores it has handed over to the same retailer and how quickly it remedied defects.

3. Prepare for acceptance as you would for the deal. Obtain an independent technical report before the acceptance date, and reserve every known defect and the contractual penalty in the record; otherwise only a damages claim remains and the penalty is lost.

What to check:
• the building permit has been issued and has become final;
• a payment schedule under § 3 MaBV or a guarantee under § 7 — and no waiver of protection without an equivalent guarantee;
• the lease is signed: handover date, rent commencement, long-stop date;
• independent technical supervision and its report before acceptance;
• the developer's financial statements, its previous projects for the same retailer and security for five years of warranty obligations.

Sources: MaBV §§ 3, 7; BGB §§ 341, 634a, 640, 644, 650u, 650v; InsO § 106; German Prime Retail series, Parts 3 and 6; Gordon Real Estate Group experience. Legal position as of October 2026.

Photo: Jan-Philipp Thiele / Unsplash

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

Ilya Gordon