Units sold ÷ Total units
This calculation is easily traceable, but can conceal the differences in value between penthouse, standard floor, pitch or commercial unit.
Guide · property development finance
Presale Requirements in Property Development Finance
The pre-sale quota is often a payout requirement in the property development finance. However, ‘40 % sold’ may, depending on the definition, mean 40 % of the units, of the planned sales proceeds or of a bank-accountable value. This article separates credit agreement, German sales contract law and supervisory thresholds from CRR III and EBA.
Status: 24. August 2026 · Technically tested by Jürgen Kronawitter
Direct answer
What is the pre-sale quota for a property development finance?
At a glance: The pre-sale rate measures which part of a project is legally sold before an agreed deadline. There is no universal quota. In the term sheet and credit agreement, lenders determine which contracts count, what value is in the denominator, when the threshold must be reached and how to prove it.
For the bank, pre-sale limits the marketing and repayment risk: Already tied buyers and traceable purchase prices support the assumption that the loan can be repaid from sales proceeds. However, the ratio does not replace the examination of costs, equity, permits and construction progress, nor a complete credit decision.
Separate three levels cleanly
Same term, different legal consequence
- Credit agreement: individual payment requirement or covenant between bank and borrower.
- German law: Form and maturity of purchaser contracts, in particular § 311b BGB and § 3 MaBV.
- CREDIT RISK: Capital backing of certain ADC exposures at credit institution level.
Formula and definition
How is the pre-sale quota calculated?
A quota is only meaningful if the numerator, denominator and reference date are mentioned. In banking practice, the following readings are mainly present.
Eligible purchase prices ÷ planned total sales proceeds
The value-based ratio more accurately reflects the revenue contribution. It must be clarified whether gross purchase prices, net proceeds, haircuts or bank-side minimum sales prices apply.
Eligible net proceeds ÷ credit or residual debt
Here, the actual loan repayment is in the foreground. Release amounts, sales costs, taxes or priority costs may reduce the eligible revenue.
Bank definition instead of market formula
Some credit agreements combine minimum number, minimum value and minimum price per square metre. Decisive is the written definition – not an isolated percentage from a conversation.
Which points therefore already belong in the term sheet?
At least reference value, eligible contract types, handling of cancellation rights and conditions, minimum purchase prices, deadline, form of proof as well as the legal consequence in the event of undershooting or exceeding. In the case of several banks or tranches, it must also be clarified whether the quota applies project-wide or per facility. This prevents sales and financing from working with different key figures.
Regulatory classification
What do CRR III and EBA do with 50 %, 10 % and 25 %?
Article 126a of the Consolidated Capital Requirements Regulation (CRR), as of 26. June 2026, deals with so-called ADC risk positions: financing the acquisition, development or construction of residential and commercial real estate. In principle, the requirement provides for a risk weight of 150 %. Certain residential real estate ADC positions may be weighted 100 % under the conditions set out in paragraph 2.
For this purpose, the CRR requires sound lending standards and supervision as well as either a significant share of legally binding pre-sale or pre-letting contracts or a significant use of the debtor’s own funds. The since 4. November 2025 applicable EBA Residential Real Estate ADC Guidelines Concrete these terms.
Supervisory thresholds
What the numbers actually mean
- 50 %: Eligible sales prices in relation to the total loan amount must reach at least this threshold for the EBA sales ratio.
- 10 %: an eligible pre-sale contract generally requires a substantial, realizable deposit of at least 10 % of the selling price or a strictly equivalent hedge.
- 25 %: Alternatively, qualified, subordinated risk-bearing equity may attain at least 25 % of the value of the property accepted by the bank upon completion.
For the regulatory sales quota, the numerator indicates the sum of the prices from eligible, legally binding purchase and qualifying pre-sale contracts. The denominator shall include the total amount of the loan, including drawn and undrawn amounts, and in the case of several participating financiers, the relevant facilities under the Guidelines shall be taken into account. The 10 % requirement applies to the technical pre-sale contract, not in addition to an already legally binding final purchase contract.
The key difference: These thresholds determine the prudential treatment of the exposure to the bank. They create neither a general statutory minimum ratio for property developers nor a claim for credit commitment or disbursement. In the credit agreement, a bank may agree on a different pre-sale condition, even more stringent or additionally to be fulfilled.
The 25 % alternative is also not a flat-rate “capital ratio of construction costs”. The reference value is the completion value accepted by the bank. Only the contributions associated with the project and subordinated to the bank, such as cash invested or separated, certain grants, project costs already paid or land contributed, at its relevant value, as described in the guidelines, are eligible. The bank checks form, value and availability.
German contract reality
Which purchase contracts are included in the pre-sale?
The short answer is: only the contracts that meet the agreed bank definition. In the German property development business, the examination regularly begins with the legal binding effect.
Check shape effectiveness and conditions
After § 311b BGB a contract by which a party undertakes to acquire or transfer real estate property requires, in principle, notarisation. For the bank examination, possible rights of withdrawal, suspensive conditions, supplements and the credit rating of the acquirer remain relevant.
Non-automatically eligible
Reservation agreement, pre-registration in sales or letter of intent prove demand, but are not automatically a form-effective property purchase contract or an EBA-qualifying pre-sale. Crediting should be clarified in writing with lenders and legal advice.
Why the EBA down payment must not be confused with an acquisition rate
For certain pre-sale contracts, EBA shall specify a deposit of at least 10 % or a strictly equivalent collateral that can be applied in the event of non-acceptance. As a result, there is no recommendation to immediately move into the German contract 10 %. § 3 MaBV limits when and in which instalments a property developer may receive the acquirer’s assets. Notary, legal advice and financing bank must classify the concrete structure.
For proof, the bank typically receives a sales list with unit, buyer, date, purchase price, payment plan, terms and status. In addition, there are the contracts and, if necessary, notarial confirmations. Personal data should be provided only to the extent necessary and through a protected data room.
Worked example
Why the same project can simultaneously achieve 35 %, 36.7% and 55 %
The following simplified example shows why each percentage needs its reference size. It is not a financing commitment and assumes that the aforementioned contracts are each eligible.
Housing project with 20 units
- Planned total sales proceeds: €12.0 million
- Total credit facility, drawn and naughty: €8.0 million
- Seven eligible contracts: €4.4 million
Depending on the denominator, a different quota
- Unit quota: 7 ÷ 20 = 35,0 %
- Value ratio: 4.4 ÷ 12.0 = 36,7 %
- EBA sales quota: 4.4 ÷ 8.0 = 55,0 %
The regulatory 50% threshold could be met in this example if all other EBA requirements are satisfied. If the bank instead required, purely for illustration, contracted sales equal to 40% of planned total sales revenue as a drawdown condition, €4.8 million would be needed. At €4.4 million, that condition would not yet be satisfied. The assumed 40% is an illustrative calculation, not a market standard.
The equity alternative also calculates differently: With a completed value of €12.0 million accepted by the bank, €3.0 million qualified equity would correspond exactly to 25 %. This could support the regulatory alternative, but does not automatically replace an additional agreed pre-sale condition.
Credit assessment
What evidence does the bank expect?
Pre-sale is only one component of a robust project review. The EBA guidelines on lending and monitoring require, among other things, a plausible business plan for real estate development, cost and approval review, liquidity provision, assessment of the saleability according to value, volume and time as well as monitoring of the construction progress.
A published Project documents checklist of Raiffeisenlandesbank Niederösterreich-Wien Practice illustrates: project description, costs, financing structure, profitability calculation, evaluation, stakeholders, timetable and marketing belong together. The specific document requirement of the own creditor remains relevant.
Testable sales package
Bringing together this information
- current unit and price list with reference date,
- contract status and unit purchase price;
- proof of legal commitment and conditions;
- expected net proceeds and release amounts;
- reconciliation with the credit definition and the payout threshold;
- Protocol of amendment for cancellation, supplement and payment.
Deepening for listening
property development finance in practice
The audio sequence classifies project financing, whole-loan approaches and cooperation with financing partners. It complements the computational perspective of this contribution with structural and process questions.
The podcast page “property development finance – individual solutions for your construction project”
Additional video note: property development finance – Why you need the right partner now.
Audio · self-hosted
Project financing in the interest rate turnaround
Original recording in German.
Additional guidance; the consequence does not replace an examination of the specific credit agreement.
Options for action
What to do if the pre-sale quota has not yet been reached?
An undershoot should be discussed early with the lender. Which measure makes sense depends on the project phase, margin, liquidity and contractual consequences.
Update pricing and sales plan
Re-establish sales speed, target groups, unit mix and resilient demand without jeopardizing the project margin through uncoordinated discounts.
Project or call phasing
Structuring construction phases, tranches or disbursements according to clear milestones, as long as lenders, construction process and contractual situation allow this.
Check more equity or collateral
Additional funds can reduce the risk. Whether and how they are credited must be clarified in writing before payment.
Negotiating a change or waiver
An adjustment, deadline extension or waiver is a credit decision, not a claim. Alternative structures such as Whole loans or mezzanines do not automatically solve a missing quota either.
Typical errors
What often leads to misunderstandings in the quota?
- A percentage is communicated without numerator, denominator and deadline.
- Reservations are treated as legally binding sales contracts.
- The CRR/EBA threshold shall be equated to a credit condition.
- Gross purchase prices are used, although only net proceeds count.
- Withdrawal rights, conditions, cancellations or discounts are missing in the reporting.
- The quota is considered in isolation, although costs or liquidity are no longer current.
Note set
Four questions before each percentage
What Is it in the numerator? Where: Is it being put in proportion? When Is it measured? What is the legal consequence Does the result have it?
Anyone who documents these four points in the data room and term sheet identically creates a reliable basis for sales, credit checks and ongoing reporting.
FAQ
Frequent questions about the pre-sale quota
What Is a Pre-Sale Quota?
The pre-sale rate shows which part of a property developer project has been legally sold before a fixed deadline. Reference size and eligible contracts are not uniform: the relevant definitions in the term sheet and credit agreement are relevant.
How high must the pre-sale ratio be for a property development finance?
There is no universal quota applicable to every property developer loan. Amount, reference value, deadline and proofs are agreed on a project- and lender-related basis. A regulatory EBA threshold may not automatically be read as a payment requirement of the credit agreement.
Are 50 % from the EBA guidelines a minimum legal quota for property developers?
No. The 50 % are part of a regulatory calculation for certain residential ADC risk positions of the financing bank. They are not a general statutory pre-sale obligation of the property developers and no automatic payment commitment.
Are units sold or purchase prices counted?
Both approaches are possible. Banks may measure presales by units, purchase prices, planned sales revenue or eligible net proceeds. The EBA framework uses eligible contracted sale prices relative to the total loan amount. Every ratio should therefore specify its numerator and denominator.
Do reservations count towards the pre-sale quota?
Not automatically. A reservation or declaration of intent is neither automatically a notarial land sale contract under German law nor necessarily an eligible pre-sale contract according to EBA criteria. The decisive factor is legally binding, the content of the contract and the definition of the lender.
Can equity replace the pre-sale?
In the case of residential real estate ADC, under the conditions of Article 126a CRR and the EBA Guidelines, a qualifying capital ratio may be an alternative to the pre-sale condition therein. The creditor may still contractually demand pre-sales.
Does a fulfilled pre-sale quota guarantee the payout?
No. The pre-sale quota is typically just one of several conditions. In addition, among other things, proof of equity, liens, permits, cost inspection, construction contracts, insurance and proof of a balanced budget may be required.
Sources and classification
Primary sources on the legal and regulatory status
This contribution shall be based on the following: CRR consolidated version of 26. June 2026which: German version of the EBA Guidelines on ADC risk positions, § 311b BGB and § 3 MaBV. Retrieval and editorial review: 24. August 2026.
Please note: The contribution offers general professional orientation and no legal, tax or credit advice. It does not replace the examination of the specific purchase and credit agreement or the credit decision of a financier. Decisive are the current original sources, the contractual agreements and the advice in individual cases.
About the author
Jürgen Kronawitter
Jürgen Kronawitter is Managing Director of Alternate Immobilien GmbH. He accompanies property developers, property developers, investors and property investors in the preparation, structuring and mediation of professional real estate finance in the Germany, Austria and Switzerland.
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