Focus area · Construction law

Developer contract & BTVG.

Anyone who pays before completion bears a particular risk. We review contract, security and escrow handling and enforce your rights, from the contract review to unwinding.

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BRANDAUER Rechtsanwälte

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Anyone who buys an apartment or a house before completion and makes payments for it is particularly in need of protection. The Austrian Developer Contract Act, the BTVG for short, protects these buyers. It applies if more than 150 euros per square metre of usable area are to be paid in advance before completion, and obliges the developer to provide information, form and security.

The central question is how the advance payments are secured. The Act knows several security models and provides for an escrow agent who monitors construction progress and releases the instalments. Whoever understands the payment schedule, the security and the role of the escrow agent recognises risks early and can guard against them.

This page orders the security models, the role of the escrow agent and the points that count before signing. The guide below helps you assess your phase but does not replace an examination of the individual case.

Assess your phase

Where do you stand on your developer contract?

Answer one or two questions about your phase. You will receive a first, non-binding assessment of the next steps.

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01 Question 1

Where do you stand in your developer purchase?

A developer contract runs through phases: the review before signing, the construction phase with instalment payments, and the critical case of delay, defects or insolvency. Different steps apply depending on the phase.

All paths at a glance

Overview of all answers.

Before signing you have the greatest room for manoeuvre. Have the contract and security checked now.

Before signing is the right moment to review the payment schedule, the security model and the escrow arrangement. The BTVG applies if you pay more than 150 euros per square metre of usable area before completion, and then requires information, form and security obligations as well as an escrow agent named in the contract.

Watch out for a statutory instalment schedule, a complete building description, a clear completion date and the rights of withdrawal. After signing the room for manoeuvre is small, so reviewing the draft is worthwhile.

During the construction phase the correct release of instalments by construction progress is decisive.

If construction is already under way, the handling via the escrow agent is central. Under the instalment schedule, payments may only be demanded in line with actual construction progress, for example after the shell, the roof or completion. The escrow agent releases an instalment only once the relevant progress is confirmed, usually by experts or chartered engineers.

Do not pay an instalment before the associated construction progress is confirmed. This avoids paying in advance for work not yet performed.

In the event of delay, the agreed completion date and the rules on contractual penalties count.

If the completion date is not met, the contractual rules matter: a clearly agreed date, any contractual penalty for delay and your right to set a deadline. Record the delay and its consequences and check what the contract provides for this case.

Have it assessed early which claims exist and how to secure them. A clean deadline notice is often the first step.

If the developer becomes insolvent, the agreed security model decides your protection.

If the developer becomes insolvent, everything depends on whether your advance payments are effectively secured. Under the instalment schedule with registered security in the land register, you pay only by construction progress, which limits the possible loss. A bank guarantee or insurance secures payments already made. Without effective security, however, a substantial loss is possible.

Review the contract, the security arrangement and the escrow documents at once and have it checked which claims exist in the insolvency proceedings.

If the finished building deviates from what was agreed, warranty and damages come to the fore.

If the handed-over property shows defects, the general rules of warranty and damages apply. What matters is what was owed under the plans, the specification and the building description. Record deviations and give provable notice of defects.

The deadlines start with handover and can be short. Have it checked early which claims exist and how to secure the evidence.

All recommendations at a glance

Before signing you have the greatest room for manoeuvre. Have the contract and security checked now.

During the construction phase the correct release of instalments by construction progress is decisive.

Do not pay an instalment before the associated construction progress is confirmed. This avoids paying in advance for work not yet performed.

In the event of delay, the agreed completion date and the rules on contractual penalties count.

Have it assessed early which claims exist and how to secure them. A clean deadline notice is often the first step.

If the developer becomes insolvent, the agreed security model decides your protection.

Review the contract, the security arrangement and the escrow documents at once and have it checked which claims exist in the insolvency proceedings.

If the finished building deviates from what was agreed, warranty and damages come to the fore.

The deadlines start with handover and can be short. Have it checked early which claims exist and how to secure the evidence.

The security models at a glance

Bank guarantee, land register, pledge and escrow agent

The BTVG knows several ways to secure the advance payments. Which model is agreed decides how well you are protected in a crisis. The escrow agent acts across all models as a control instance.

Security models and escrow agent in the developer contract under the BTVG
Model	How it protects	Particularity
Contractual Bank guarantee or insurance	A bank or insurer stands behind the payments made	Secures advance payments already made
In rem Registered security with instalment schedule	Registration in the land register and payment by construction progress work together	In practice the most common model
In rem Security by pledge	A pledge on the contractual property secures your legal position	Protection via the property itself
Overarching Escrow agent	A lawyer or notary monitors construction and releases instalments	Must be named in the contract

Which model fits your case depends on the specific arrangement. What matters is that the security is effectively agreed and actually takes effect in a crisis. The table offers an overview and does not replace an examination of the individual case.

Why the BTVG protects buyers

In the developer contract the buyer pays in advance: you pay for a performance that is only to arise in the future. It is precisely in this phase that the greatest risk sits, because if something goes wrong at the developer, the money paid in advance is at stake.

The BTVG is not a general purchase law for real estate. It applies specifically where more than 150 euros per square metre of usable area are paid in advance before completion. It then obliges the developer to provide information, form and security so that the advance payment risk does not remain unprotected. Whether the threshold is exceeded follows from the payment schedule in connection with the usable area.

Security, instalment schedule and escrow agent

The heart of the BTVG is the security of the advance payments. It can be contractual via a bank guarantee or insurance, in rem via a registered security combined with an instalment schedule, or via a pledge on the property. In practice the registered security with an instalment schedule is the most common.

Under the instalment schedule, payments may only be demanded in line with actual construction progress. The Act distinguishes between an instalment schedule with earlier payout and one with stronger buyer protection and slower payout. Which of them is in the contract directly influences your risk.

The escrow agent must be a lawyer or a notary and is to be named in the contract. They monitor construction progress and release the instalments only once it is confirmed, usually by experts or chartered engineers. The differences between the instalment schedules are explored in the linked article.

Much is decided before signing

After signing the room for manoeuvre is small, so the contract should be reviewed before signing. Decisive are a statutory instalment schedule, a complete building description, a clearly regulated completion date and an appropriate contractual penalty for delay. The structure of the escrow relationship should also be reviewed. What matters in reviewing a construction contract overall is shown in the article reviewing a construction contract before signing.

The BTVG provides for rights of withdrawal under certain conditions, for example where mandatory particulars are missing. In addition, contractual or general civil-law grounds for withdrawal may exist. The deadlines here are often short, which is why prompt legal advice is worthwhile. Which typical risks the developer contract holds is explored in the linked article on risks and advance payment.

This page offers a general overview of the Austrian legal position and does not replace advice in an individual case. The specific circumstances of your building project and the structure of your contract are always decisive.

Frequent questions

Developer contract and BTVG.

What does the Developer Contract Act regulate? +

The BTVG protects buyers who make payments before completion. It obliges the developer to secure these payments, prescribes information and form obligations and provides for an escrow agent who monitors compliance. Without effective security the payment obligations are limited.

From when does the BTVG apply to my purchase? +

The BTVG applies if you pay more than 150 euros per square metre of usable area in advance before completion. Whether the threshold is exceeded follows from the payment schedule in connection with the usable area and should be calculated before signing. If the advance payments stay below it, the protection of the BTVG may not apply.

What happens if the developer becomes insolvent? +

The agreed security model is decisive. Under the instalment schedule with registered security you pay only by construction progress, which limits the loss. A bank guarantee secures payments already made. Without effective security, however, a substantial loss is possible.

Can I withdraw from a developer contract? +

In depth

Articles on this focus area

Developer contract and BTVG: risks

When the BTVG applies, which security models exist, the comparison of instalment schedule A and B and the role of the escrow agent.

Reviewing a construction contract before signing

What matters in reviewing a construction contract, from the specification through the payment schedule to the security.

Construction defects after handover

Which rights exist when the finished building deviates from what was agreed and defects appear after handover.

This might also affect you.

Construction contract and remuneration

Works contract, lump-sum and unit prices, additional orders, final invoice and enforcing or defending remuneration claims.

Construction damages and liability

Liability of planners, contractors and site supervision. Damage, fault, contributory fault and the line between damages and warranty.

Construction defects and warranty

Identify, notify and enforce defects in the building. Remedy, price reduction, rescission and the warranty periods under Austrian civil law.

Risk check

Construction project risk analysis

Role-based risk axes, one radar chart: see the overall level, top-3 risks and next steps for your project.

Start the risk analysis

A developer contract before signing?

After signing the room for manoeuvre is small. Call us directly or write to us, with a callback within one business day.

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BRANDAUER Rechtsanwälte GmbH Giselakai 51 5020 Salzburg

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