Partial delivery

Partial delivery refers, in real estate and construction law, to the provision of an agreed-upon total service in several staggered phases, with each phase being eligible for separate acceptance and billing. It is found both in the law governing contracts for work and services (e.g., in construction projects) and in sales law (e.g., the phased takeover of building sections in a development project). For builders and investors, the precise regulation of partial deliveries in the contract is crucial for clearly structuring cash flows, acceptance obligations, and liability issues.

Partial Delivery in Construction Law: Stages, Acceptances, and Payments

In larger construction projects-such as apartment buildings or commercial projects-the construction work is often divided into stages. Each partial delivery culminates in a partial acceptance, after which the client takes over the work for that stage, the risk passes to the client, and a partial payment becomes due. The Real Estate Broker and Developer Ordinance (MaBV) governs which construction phases trigger the due dates for individual installments in developer projects-from the shell of the building through the roof and windows to the heating installation. The MaBV provides for up to 13 individual installment stages linked to specific construction milestones. Deviations from this are permitted only under strict conditions and must be supported by a building permit or a declaration of exemption.

Important for builders: Each installment under the MaBV may only become due if the corresponding construction progress has actually been achieved and a corresponding certificate from the site manager is available. Reputable developers provide this documentation unsolicited; if it is missing, payments should be withheld until the documentation is provided.

Legal Considerations: Partial Acceptance and Warranty

With each partial acceptance, the warranty period begins to run for the accepted section-five years for buildings under § 634a BGB. This means: If sections are accepted at staggered intervals, multiple warranty periods run concurrently, which complicates the tracking of defects. Builders should therefore exercise the same diligence during partial acceptance as during final acceptance: prepare a report, document defects in writing, and, if necessary, consult an independent building inspector.

If defects are not reported during partial acceptance, this can significantly complicate the subsequent enforcement of claims. In particular, defects fraudulently concealed are exempt from this preclusive effect-but the burden of proof lies with the client. We therefore generally recommend not conducting acceptance without an independent expert when larger construction phases are involved.

Another critical point: During the partial acceptance of the shell construction phase, screed moisture, wall moisture, and the quality of concrete compaction should be checked-defects here can hardly be remedied without considerable effort once the structure is closed.

Partial Delivery in Real Estate Purchase Agreements

In sales law, partial delivery may occur when, for example, individual parcels or building units are handed over in stages in a land development project. In such cases, the purchase agreement must contain clear provisions regarding the following points:

• Handover dates with specific dates or measurable completion criteria
• Due dates for purchase price installments depending on the respective partial delivery event
• Rights of withdrawal in the event of a delay in individual partial deliveries - with a mechanism for setting deadlines and grace periods
• Contractual penalties in the event that delivery dates are not met
• Protection of down payments through a guarantee or retention of security

We recommend always consulting a notary specializing in real estate law for such contracts and consulting an attorney with experience in construction documentation before signing the contract.

Practical Tip for Property Owners in Nuremberg and Franconia

Several large-scale neighborhood developments are currently underway in Nuremberg and the Franconia region-such as on the former AEG site in Nuremberg-Maxfeld or as part of the Lichtenreuth urban development project-where buyers are purchasing residential units from projects with staggered completion dates. We recommend carefully reviewing, upon signing the contract, which phases are due for acceptance and payment at what point in time.

A detailed construction schedule and defined consequences of delay protect the buyer in the event of construction delays. In addition, the security of the installments paid should be guaranteed by a first-priority bank guarantee or a notarized security agreement-especially for projects that are still in the early stages of construction. In Nuremberg, we are aware of projects in which buyers have suffered significant losses due to insufficiently secured purchase price installments in the event of the developer’s insolvency.

We would be happy to assist you with the purchase of a new-construction apartment or a townhouse in the Nuremberg metropolitan area-from the initial viewing through contract review to final inspection with experts.

Frequently Asked Questions

Do I have to accept a partial delivery even if the rest is not yet finished?

Yes, if the completed section is capable of being accepted independently and the contract provides for this, there is generally an obligation to accept. Acceptance is then limited to the relevant part; defects in the part not yet completed remain unaffected. Anyone who refuses partial acceptance without cause is in default of acceptance and risks having triggered the transfer of risk nonetheless-without the opportunity to record any defects in the acceptable part in the acceptance report. We therefore recommend never refusing acceptance, but rather listing any defects in the acceptance report.

What happens if the contractor fails to deliver a partial shipment on time?

After setting a deadline and upon the expiration of the grace period, the client may claim damages, withdraw from the contract (with respect to the affected part), or claim a contractual penalty-provided this was agreed upon in the contract. We recommend always explicitly agreeing on contractual penalties for delays in new construction projects. In practice, contractual penalties of 0.2-0.5% of the contract amount per working day of delay are common, capped at 5% of the total contract amount. These amounts can be substantial for larger projects and create a significant incentive for the contractor to meet deadlines.

How do I avoid disputes during partial acceptance?

Prepare a detailed acceptance report including the date, people present, identified defects, and agreed-upon deadlines for rectification. If you have any doubts, consult an independent building inspector-they can identify hidden defects before the report is signed. Pay particular attention to signs of moisture, cracks in the plaster, and the proper execution of waterproofing, which will no longer be accessible once all trades have been completed. Upon request, we can connect you with suitable building experts from the network of the Nuremberg Chamber of Industry and Commerce for Middle Franconia.

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