Buying off-plan: how to assess the developer behind a rental project

When you buy an apartment off-plan in Germany, you pay a developer (Bauträger) for a building that does not yet exist, so the company matters as much as the floor plan. Property developer due diligence for an off-plan purchase in Germany comes down to five questions: which company signs, what it has completed, whether this project's financing and approvals are in place, what the public records show, and what an independent lawyer and construction expert make of the contract and plans. The legal protections limit how much of your money is exposed. They do not guarantee that the building is finished, on time or at the agreed price.

This guide covers the counterparty only. For the apartment's own documents, see the checks to make before buying; for the choice of category, new build or existing.

Many projects are sold by a project company set up for one building, usually a GmbH, while the brochure shows the group's name. Your claims and security run against the company named in the notarised contract. If it fails, the group's reputation pays nothing unless someone in the group has made an enforceable commitment.

• Register entry. The commercial register (Handelsregister) shows the company's registration date, share capital and managing directors, and its filed shareholder list (§ 40 GmbHG) links it to the group. It has been free to view at handelsregister.de since 1 August 2022 (Brandenburg courts). A GmbH needs only €25,000 of share capital (§ 5(1) GmbHG), so a new project company may own little beyond the site.
• Permit. A business that builds in its own name with buyers' money needs a permit under § 34c(1) no. 3(a) GewO, which is refused where the applicant is unreliable or its finances are in disorder, as normally after insolvency proceedings open (§ 34c(2)). There is no public register of these permits (IHK Hannover). Ask for a copy, check that it names the company signing your contract, and compare the issuing authority with the supervisory authority that the developer's website imprint must name (§ 5(1) no. 3 DDG).
• Group support. Have a lawyer assess any written group commitment. A parent company's guarantee is not a security under the developer regulations (MaBV): only a public body, a bank or an insurer authorised in Germany can act as guarantor (§ 2(2) MaBV).

Ask for a list of completed buildings with addresses, contractual and actual completion dates, and the selling company. Then visit one or two, ask their administrators (WEG-Verwalter) whether the common property was formally accepted (Abnahme) and which defects remain open (acceptance and defects), and check whether the same people and general contractor are behind your project.

A good record shows that the group has delivered before, under past costs and interest rates. It does not show that this project company can pay its contractors next year.

• Building permit (Baugenehmigung): issued, for this design, and when. The developer may not take your money before it is issued or otherwise confirmed (§ 3(1) no. 4 MaBV).
• Division into apartments: it must be registered in the land register before you pay (§ 3(1) no. 2 MaBV).
• Release undertaking (Freistellungserklärung). The site is usually charged to the bank financing construction. Before you pay, release of your apartment must be secured on payment of the price or, if the building is never finished, of the share matching the work done. The bank may instead reserve the right to repay what you paid, up to the apartment's proportionate value. You must receive the undertaking, and the contract must refer to it (§ 3(1) sentences 2 to 5 MaBV).
• Construction loan and contractor: whether the loan covers the whole building, and who builds it.
• Schedule and specification: the contract needs a binding completion date or construction period (§ 650k(3) BGB); for inclusions, see Baubeschreibung and Sonderwünsche.

• Accounts. A GmbH must file its annual accounts for the company register (Unternehmensregister) within a year of its financial year-end (§ 325(1) and (1a) HGB). Small companies omit the profit and loss account; the smallest may deposit a balance sheet supplied only on request (§ 326 HGB; § 9(6) HGB). Search unternehmensregister.de, and read the group's accounts too.
• Insolvency announcements. Courts publish them on insolvenzbekanntmachungen.de (§ 9 InsO). Search the project company, the parent and the directors' other companies. Entries are deleted at the latest six months after proceedings end (§ 3(1) InsBekV), so a clean search says nothing about older failures.
• Land register (Grundbuch): open only with a legitimate interest (§ 12(1) GBO), but the notary should check it (§ 21(1) BeurkG). Ask for the extract to see whose land charge sits on the site.

The notary is impartial and does not judge the developer. For a consumer contract, the notary should normally give you the intended text two weeks before the appointment (§ 17(2a) BeurkG). A construction lawyer checks the payment plan, release undertaking, completion date, security, any developer withdrawal rights and the consequences of delay. A construction expert (Bausachverständiger) reviews the plans and specification and can later confirm progress before each instalment (Bauträger payment plans).

Your payments are protected in three ways:

1. Conditions before any payment. The contract must be effective, confirmed in writing by the notary and free of developer withdrawal rights; your priority notice of conveyance (Vormerkung) must be registered; release from prior charges must be secured, even if the building is never finished; and the building permit must exist (§ 3(1) MaBV). Payment then comes in up to seven instalments following construction progress (§ 3(2)).
2. Or a guarantee. The developer may depart from these rules if it provides security for all your repayment claims, kept until the § 3(1) conditions are met and the apartment is complete (§ 7(1) MaBV). Neither protection can be excluded by contract (§ 12 MaBV).
3. A 5 per cent completion security (Fertigstellungssicherheit). A consumer (§ 13 BGB) receives, with the first instalment, security of 5 per cent of the price for timely completion without significant defects (§ 650m(2) BGB), a rule developer contracts keep (§ 650u(2) BGB; § 1 AbschlagsV). It takes the form of a bank guarantee or, at the developer's request, a retention from your instalments (§ 650m(2) and (3)).

If the developer becomes insolvent, a registered Vormerkung holds: you can claim transfer of the apartment from the insolvency estate even though the developer's other obligations are unfinished (§ 106(1) InsO; § 883(2) BGB). But the administrator may refuse to perform the rest, leaving your claims for non-performance as ordinary insolvency claims (§ 103 InsO). As a Berlin notary puts it, the Vormerkung secures ownership, not construction (Scheidacker, April 2026). That leaves with you:

• the cost to finish, where new contractors cost more than the unpaid price;
• the delay, while loan interest runs without rent (delayed completion);
• defects, since claims against an insolvent developer usually recover only a fraction (Scheidacker). The consumer association VPB says the 5 per cent security normally does not cover insolvency-related extra costs and recommends negotiating 10 per cent (VPB).

Staged instalments keep your payments roughly in line with the work done. They do not pay for the rest of the building.

During a purchase in Berlin, Dresden or Leipzig, Alpha Minoris's Buyer's Agent service can collect these project documents and put your questions to the developer in writing, which helps if you live elsewhere. It does not guarantee completion or replace the lawyer's or construction expert's review.

Illustrative example. Fictional developer and figures. Apartment B: Leipzig, 50 m², bought off-plan for €250,000; developer's building application filed in 2024; purchase contract notarised on Thursday 6 March 2025; completion and handover planned for 1 November 2026. The buyer is a private individual buying to let and is assumed to count as a consumer.

In February 2025, B's buyer works through the checklist with the draft contract:

• The seller is a project GmbH registered in 2023 with €25,000 share capital, wholly owned by the group holding; the same two people direct both. Its only accounts are a deposited 2023 balance sheet.
• The § 34c permit names the project GmbH, and the issuing authority matches the imprint.
• The group has completed four buildings in Leipzig and Dresden since 2018: three on time, one four months late. One administrator confirms acceptance of the common property, with two defects open.
• The building permit was issued in January 2025, and the bank's release undertaking is attached to the draft. The division into apartments is not yet registered, so nothing can fall due until it is.
• No insolvency announcements for the GmbH, the holding or the directors' other companies.
• The draft uses MaBV instalments, the first (30 per cent, €75,000) due only after earthworks start and every § 3(1) condition is met, and a €12,500 (5 per cent) security by bank guarantee.

A reasonable file, but it cannot show whether the project company will pay its contractors in 2026. Suppose construction stopped after the shell. B's buyer would have paid 58 per cent of the price, €145,000, in instalments designed to track the work, with €105,000 unpaid. If finishing B's share through new contractors cost €30,000 more than that, the security would cover €12,500 and €17,500 would fall on the buyer, before any interest from the delay.

Before you sign for an off-plan apartment, bring the draft contract and the developer's documents, and decide which questions need a lawyer or construction expert. Discuss your first rental property with Alpha Minoris.