Property Developer Contract: Must I Pay the Final Instalment as Soon as the Flat Is Ready to Move Into?

The developer demands the final instalment the moment you can move in – yet lists of defects are still stuck to the walls. The MaBV instalment rules put buyers on the front foot: ready to occupy is not the same as fully completed.

Your new freehold flat has been handed over to you by the developer ready to occupy – you have the keys and could move in. And yet your acceptance record still shows outstanding defects: the floor tiles in the bathroom, missing skirting boards, an unfinished exterior. Then the invoice for the final instalment lands on your doormat, often a substantial four- or five-figure sum. Do you now have to pay, even though not everything is finished?

In short

No. Being ready to occupy and being fully completed are two legally distinct states. § 3 MaBV deliberately structures the statutory instalment schedule in two stages: where the contract provides that a penultimate instalment falls due on readiness to occupy and the final instalment only “on full completion”, the latter must require a higher standard of construction than mere habitability – including the rectification of every defect recorded in the acceptance record. As long as that is not the case, you are entitled to withhold the final instalment.

How I can help you

• I review your specific instalment schedule and classify the instalment being demanded correctly in law.
• I compare your acceptance record with what the developer is calling “fully completed”.
• I calculate how much you can withhold without falling into default yourself.
• I deal with the developer or their solicitor and set deadlines for the defects to be remedied.
• I represent you if the developer takes the final instalment to court.

The statutory instalment schedule under § 3 MaBV

Developers cannot draw down your money freely, however the contract might read. § 3 of the Estate Agents and Property Developers Ordinance (Makler- und Bauträgerverordnung, MaBV) provides that payments may only be demanded in up to seven instalments, each tied to a specific, actually achieved stage of construction progress – from the first groundworks through the shell, roof and fitting-out trades to completion. A clause that departs from this statutory instalment schedule to your disadvantage is invalid. The point that matters in your case: the instalment tied to readiness to occupy is precisely not the last instalment in the schedule. The final instalment comes only afterwards and is independently tied to “full completion”. This two-stage structure is no accident; it is designed to preserve for you, as the buyer, a means of pressure over the last outstanding points.

Ready to occupy is not full completion

This is exactly where the statutory two-stage structure of § 3 MaBV bites. A flat is ready to occupy once it has been built to the point where moving in can reasonably be expected of you – even if minor residual works are still outstanding. Full completion demands more: every service owed under the contract must have been provided, and the defects documented in the acceptance record must have been remedied – and that expressly includes works outside the flat itself, such as paths, driveways or the façade. If your contract uses both terms for different instalments, it would be nonsensical to treat them as the same: the developer would then simply have tied the final instalment to the very same condition as the penultimate one, and the distinction drawn in the contract would be meaningless. In practice this means that a developer who demands the final instalment by pointing to your having moved in is confusing the two stages – whether deliberately or not.

Acceptance, defects and your right to withhold

The point at which the final instalment falls due must be kept separate from acceptance under § 640 BGB. As the customer you are, in principle, obliged to accept work that has been produced in accordance with the contract; you may not refuse acceptance on account of immaterial defects, but you may record defects in the acceptance record and reserve your rights. Acceptance alone does not, however, make the final instalment due where your contract – as is usual under the statutory instalment schedule – expressly turns on full completion. As long as documented defects remain unremedied, you have a right to withhold. In practice the amount is guided by the cost of putting the defects right, together with a reasonable margin to apply pressure – withhold too little and the developer loses any incentive to make good; withhold too much and you can find yourself in default. This is precisely the balance you should not be striking on your own.

What to do now, in concrete terms

If the developer demands the final instalment, first check your acceptance record: are defects or outstanding residual works noted there? If so, tell the developer in writing that the final instalment is not yet due for want of full completion, and set a reasonable deadline for the defects to be remedied. In the meantime, pay only the undisputed portion so as not to risk falling into default. If the developer fails to respond or disputes the defects, you should have the deadline and the amount withheld put on a sound legal footing before a claim from the developer catches you unprepared.

An example from practice

A married couple buy a newly built freehold flat. The contract provides for one instalment “on readiness to occupy, in exchange for handover” and, after that, the final instalment “on full completion”. When they move in, the bathroom tiles are unevenly laid, skirting boards are missing, and the footpath to the underground car park has not yet been laid – all noted in the acceptance record. The developer nonetheless invoices the full final instalment. The couple pay only a small part and withhold the rest as a means of pressure until the defects are remedied. This approach reflects the two-stage structure built into § 3 MaBV: as long as full completion has not been achieved, the final instalment does not fall due.

Common mistakes

• The final instalment is paid in full “for the sake of peace” – after which there is no leverage left to make the developer put the defects right.
• Payment is refused in full even though only immaterial defects remain outstanding – which can trigger default on your own part.
• Defects are raised verbally at acceptance but not recorded in writing in the record – without documentation it is later almost impossible to prove what was outstanding.
• The amount withheld is fixed “by feel”, without putting a figure on the actual cost of rectification.

Frequently asked questions

May I withhold the entire final instalment when only minor defects remain?

Not as a matter of course. The amount you withhold should reflect the actual cost of putting the defects right, plus a reasonable margin to apply pressure. A blanket refusal to pay anything at all over only trivial outstanding works can leave you in default yourself.

What happens if I have already moved into the flat even though defects are still outstanding?

Moving in on its own changes nothing about when the final instalment falls due, provided your contract ties that instalment to full completion. Being ready to occupy and being fully completed are legally distinct stages.

Must I refuse to accept the works in order to protect my rights?

No, as a rule you must not. Where defects are immaterial you are not entitled to refuse acceptance in any event – what matters is that you record the defects in the acceptance record and expressly reserve your rights.

Can the developer sue for the final instalment while defects are still outstanding?

The developer can bring a claim, but has poor prospects of success as long as documented defects remain unremedied and your contract ties the final instalment to full completion. That follows from the two-stage structure of readiness to occupy and full completion built into § 3 MaBV.

Does this also apply where the contract merely refers to “completion”, without the word “full”?

That depends on how the individual contract is to be interpreted on its own facts. What is decisive is how the separate instalments in your contract are worded and distinguished from one another – which is precisely why it always pays to look closely at the exact wording of your developer contract.

Your next step

Before you pay or refuse a final instalment, you should have your individual instalment schedule and your acceptance record classified in law – blanket statements from the internet are no substitute for interpreting the contract on its own facts. I will check for you whether, and to what extent, a right to withhold exists, and I will set the developer the deadlines that are needed. You will find more on contract-law questions surrounding building and property developer contracts at /en/topics/contract-law. Arrange an initial consultation before you pay too hastily under pressure.

This article provides general information and is no substitute for legal advice in an individual case. Last updated: 2026-07-22.

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