Payment disputes affect the ability to complete a project. We review interim applications, final accounts, retention, guarantees and statutory security so that the commercial response fits the underlying entitlement.
Make the payment application auditable
Identify the contractual milestones, quantities, agreed changes and supporting documents. Distinguish work already earned from a claim for additional remuneration. Acceptance and the requirements for a final invoice can be central to final payment; an invoice alone does not resolve disputed scope.
Check withholding and security separately
A defect may justify withholding an appropriate part of the price. Under section 641(3) BGB, the usual statutory measure is twice the estimated rectification cost, subject to the circumstances. This is different from a contractual retention or an agreed security instrument.
Section 650f BGB can give a contractor a right to payment security, subject to statutory exceptions. It is not a land-register lien: a security mortgage is a distinct mechanism. Demands, deadlines and any later suspension or termination must be assessed carefully.
Address credit risk before it becomes a crisis
We review performance bonds, advance-payment guarantees and warranty security, including the conditions for calling and releasing them. Where insolvency is threatened, coordinate payment recovery with site protection, title to materials and the arrangements for finishing the work.
Four practical examples
Illustrative scenarios: the appropriate steps depend on the contract, evidence and applicable law. These are not reports of client matters.
An unpaid interim application
The contractor has submitted quantities but the employer disputes progress. Reconcile measurement evidence and undisputed sums before escalating.
An advance without a guarantee
A supplier requests a large prepayment for bespoke equipment. Negotiate security and identify ownership and delivery risks.
A disputed security demand
The employer says a defect defeats the contractor’s security claim. Examine the statutory treatment of counterclaims rather than assuming that all security falls away.
Retention after completion
A retention remains unpaid after the agreed period. Check release conditions, outstanding claims and whether substitute security was provided.
Documents that help us assess your position
Payment schedules, invoices, measurement records, acceptance documents, bank guarantees, retention clauses, notices and the final-account correspondence.
Discuss your project or dispute
Tell us where the project is located, who is involved and whether a deadline is approaching. We can then clarify the scope of the proposed engagement and the next steps.
Related construction law services
Legal framework & further reading
- German Civil Code, section 641
- German Civil Code, section 650f
- German Civil Code, section 650e
- German Civil Code, section 650g
Reviewed: 12 November 2026. Statutory references are to German law unless stated otherwise.