ᐅ Is it possible to pay the first installment (earthworks) before obtaining the building permit / planning permission?

Hello everyone,

In our purchase contract (according to real estate agent and developer regulations), the first installment of 30% is due after the start of the excavation work.

Question: Could this possibly be required even before the building permit / planning permission is granted?
Background: The (still well-interest-bearing) equity capital that must be used for the first installment has a notice period of 3 months, and I’m trying to figure out when I will actually need it. I don’t want the first invoice to arrive before I can access the funds.

This concerns a large development site being prepared and built by a developer. My feeling is that, before the building permit / planning permission, nothing can really be done to justify the first payment. Can you confirm this?

Normally, you wait until the building permit / planning permission is granted, and only then is it allowed to start the excavation work.

In theory, the contractor could also obtain a written partial building permit and begin excavation work during the building permit approval process. I’m not sure if this is possible in every federal state, but for example, in Baden-Württemberg you could do this (§61 State Building Code Baden-Württemberg).

§ 61
Partial Building Permit
(1) If a building application has been submitted, the start of construction work for the building pit and for individual components or construction phases can be permitted in writing upon request, before the building permit is granted, if there are no objections to the partial execution based on the current status of the building application review (partial building permit). §§ 54, 58 paragraphs 1 to 5, and § 59 paragraphs 1 to 3 apply accordingly.

But regarding your actual question:
Besides that, you don’t know when the permit will be issued, do you? The municipality might be extremely fast and approve it within 1.5 months (1.5 months), so what would you do then? You would have an invoice that you can’t pay.

It’s best to ask the contractor how long they expect the building permit process to take and when they could start excavation work. I would deduct a safety buffer from that timeframe and plan your cancellation accordingly. It’s better to lose a bit of interest than to possibly have to pay late fees to the contractor later on.

AllThumbs schrieb:

In our purchase agreement (according to the broker and developer regulations), the first installment of 30% is due after the start of groundwork.

The start of construction work can mean many things. It’s enough if an excavator just moves a wheelbarrow of soil. Then the first installment becomes due. This is often done when the developer needs money.

erazorlll schrieb:

In theory, the contractor could also obtain a written partial building permit and then already start the groundwork during the building permit approval process.

That’s a good point. It seems this is also possible in Berlin.

erazorlll schrieb:

But regarding your actual question:
Apart from that, you don’t know when the permit will be granted, right? It could be that the municipality is extremely fast and approves it within 1.5 months—what would you do then? You’d have an invoice that you cannot pay.

Well, we are talking about Berlin. The last thing you have to worry about here are fast authorities. Currently, building permits can take up to 3 months. Originally, I wanted to cancel the equity shortly after the notarized contract. I think that will be in around 6–8 weeks, depending on how long the developer needs to provide the documents for financing application.

erazorlll schrieb:

You’d best ask the contractor how long they expect the building permit to take and when they can start the groundwork. I would deduct a safety margin from that and plan your cancellation accordingly. Better to lose some interest than possibly pay delay interest to the contractor later.

Officially, the building application is only submitted after the selection of finishes, which can itself take up to 12 weeks. My only concern was whether any groundwork can be carried out without a building permit. I will definitely ask again, but a legal regulation would of course be the safest.

nordanney schrieb:

Start of construction can mean many things. It’s enough if an excavator moves just one wheelbarrow of soil. And then the first payment becomes due. This is often done when the developer needs money.

Well, it says start of groundwork. I will check with the developer and then decide whether to play it safe. 3 months sooner or later means about 1000 euros that I lose just in interest.

As previous speakers have said, the installments should actually be due only after the completion of trade XY, not before.

Alternatively, you can discuss with the bank the purpose of the funds and whether there are options to access the money faster, for example, by presenting the invoice.

AllThumbs schrieb:

That’s a good point. It seems the same applies in Berlin.

Well, we are talking about Berlin. The last thing you have to worry about here is fast authorities. Building permits currently take up to 3 months. I originally planned to release the equity shortly after the notarized contract. I think that will be in about 6–8 weeks, depending on how long the developer needs to prepare the documents for the financing application.

Officially, the building application is only submitted after finalizing the selections (material/sample choices), and that can take up to another 12 weeks. My only concern was whether any earthworks can be carried out without a building permit. I will definitely ask again, but having a legal regulation would of course be safest.

Well, it says “start of earthworks.” I will check with the developer and then decide whether to be on the safe side. Starting 3 months earlier or later means about €1000 in lost interest for me.

3 months for a building permit? That’s rocket speed. In Brandenburg, it takes 6 months.