When the Building Is Still on Paper

Some buyers commit to buildings that do not yet exist. A retail anchor signing onto a shopping centre still in design, an office tenant taking floors of a tower not yet poured, a logistics operator buying a warehouse that is still a planning permit. The instrument is a forward purchase, and the legal problem is simple to state: the price has to follow the proof. What follows is the architecture that does that work — the pattern, not the matter.

Sale of a finished thing is one act: deed against price. Forward purchase is not an act but a ladder. The seller’s promise has to be staged into verifiable real-world milestones, and the buyer’s money has to climb that ladder one rung at a time, with reversibility designed in at every rung that has not yet been cleared. Done well, the contract is short on warranties and long on conditions precedent — because what protects the buyer is not what the seller says about the building, but what has to happen before the next payment is due.

Four phases, four triggers

The cleanest forward purchases run as four discrete phases. Each phase ends in a real-world event that can be evidenced on a date. Each event unlocks the next payment. No event, no payment.

Phase one is the diligence gate. The antecontract is signed, the ninety-day audit window opens, the buyer’s lawyers walk the title chain, encumbrances, planning, expropriation risk and the residual reclaim exposure that haunts older Romanian land registers. No money moves. The phase exists to extinguish unknown risk before any of it becomes the buyer’s problem. If diligence fails, the antecontract unwinds on the diligence clause, not on litigation.

Phase two converts paper risk into construction risk. The seller has to subdivide the land if subdivision is needed, has to clear any residual encumbrances, has to obtain the building permit. Those three events — clean subdivided title, encumbrance-free state, permit notated in the land registry — are evidenced on a date and they unlock the deposit. The deposit is the first tranche the buyer actually spends; everything before it can be walked away from cheaply. At the moment the deposit is paid, the buyer registers a mortgage over the seller’s land in its own favour — not for the price, but for the deposit it has just put down. This is the first half of the mortgage seesaw.

Phase three is where the building actually arrives. Shell-and-core works are completed; a handover protocol is signed by both sides; previously listed conditions precedent on tenant mix, occupancy thresholds and a clean utility set are met. That handover protocol triggers the CVC — the actual sale-purchase deed — together with the second tranche. At signature the buyer’s prior mortgage is released; a new mortgage is registered, this time in the seller’s favour, securing the unpaid balance of the price. The same instrument, the opposite direction. The encumbrance is the language of trust on both sides of the deed.

Phase four is the closing of the loop. Final authority receptions — fire safety, sanitation, environmental sign-off, tenant fit-out completion where the buyer has commercial sensitivity — clear the last conditions precedent and unlock the balance. The seller’s mortgage is released on payment. The buyer holds a finished asset rather than a promise, and the seller holds nothing but cash. The deal is over.

The mortgage seesaw

The architectural move worth lifting out of the ladder is the way the encumbrance changes direction at the deed. Before the deed the seller owns the land and the buyer has committed money against it; the buyer needs a real-world hook on the seller’s asset, so the mortgage runs seller-to-buyer. After the deed the buyer owns the land and the seller is owed the balance; the seller needs the same hook in the other direction, so the mortgage runs buyer-to-seller. The instrument is identical; what shifts is whose name is on the wrong side of the title. Most disputes in failed forward purchases trace to a contract that built one half of this seesaw and not the other.

Conditions precedent are the deal

A working forward purchase is short on warranties and long on conditions precedent. The reason is mechanical: a warranty is paid in litigation, a condition is paid in non-payment. Anything that can be evidenced on a date — permit issued, mortgage cleared, protocol signed, occupancy threshold reached, authority reception obtained — belongs in the condition list, because non-fulfilment quietly suspends the next tranche without anyone going to court. Anything continuing in time — the seller’s authority to sell, the absence of undisclosed disputes, the truth of the disclosed reports — belongs in warranties, because those can only be tested after the fact. A buyer who lets the seller move evidence-on-a-date items out of conditions and into warranties has, in slow motion, agreed to sue rather than to wait.

Daily damages, tiered

Forward purchases ship with two deadlines for every milestone — an intermediate target and a hard maximal date — because the seller needs realistic slack and the buyer needs a backstop. Liquidated damages run as a daily rate from the intermediate date and bite harder past the maximal. A single rate without a cap is unenforceable in commercial practice; a cap without a meaningful daily rate is toothless. The negotiation is the ratio — how many days of daily accrual the cap can absorb before it lapses — not the rate or the cap in isolation. A useful working figure is a cap that covers roughly six to nine months of daily exposure: long enough that an ordinary slippage hits the seller, short enough that the seller does not treat the cap as the cost of delay.

Shell-and-core is the seam

Most disputes that survive a well-built contract live in the shell-and-core boundary — the moment the seller delivers an empty, watertight building and the buyer starts its fit-out. Two disciplines hold this seam. The first is a written shell-and-core scope that is exhaustive on what the seller has to deliver and silent on nothing important: the fire-safety class, the slab loading, the utility connections terminated at named points, the loading-bay widths. The second is the handover protocol — the moment delivery is acknowledged on paper. Nothing the buyer signs after the protocol is the seller’s problem; nothing the seller did before is the buyer’s. The protocol is the door between two worlds of risk, and it has to be a single dated signed page.

General information on Romanian forward-purchase and real-estate structuring, not legal advice, and no lawyer–client relationship is created. The mechanics of the antecontract, the mortgages and the conditions precedent turn on the specific facts and the current law; any live transaction needs advice on its own facts.