Can you withhold an off-plan payment

You can sometimes withhold an off-plan payment, but the consequences are severe if you are wrong: most contracts treat late payment as a default carrying interest, and many allow termination with forfeiture of what you have already paid. Establish the facts and the exact clause before you withhold anything.

What your contract almost certainly says

Off-plan contracts are drafted by developers, and the payment clauses are the ones drafted most carefully. Expect interest on late payments at a punitive rate, a cure period measured in days, and a right to terminate and retain a substantial share of what you have paid if the default continues.

Expect also that the right to withhold is either absent or narrowly conditioned. Withholding because you are dissatisfied is rarely a contractual right; withholding because a condition precedent has not been met sometimes is.

The distinction that decides it

There is a difference between ‘the work is not good enough’ and ‘the payment is not due’. The first is a dispute about quality, and quality disputes are usually handled by the defects mechanism, not by stopping payments. The second is a question of fact: the trigger in the contract has not occurred.

If your schedule is progress-based and the stage genuinely has not been reached, the payment is not late, because it is not yet due. That is a much stronger position than withholding a due payment in protest, and it needs the same thing to stand up: evidence of what is actually built.

Before you withhold anything

1. Read the payment clause, the default clause and the termination clause together, not separately.
2. Establish, with dated evidence, what state the building is actually in.
3. Compare that state against the contractual definition of the stage, in writing.
4. Take advice from a lawyer in the country of the property. This is where general reading stops being enough.
5. Notify in the form and within the time the contract requires. A valid objection made the wrong way is often no objection.

The middle courses

• Paying under protest, in writing, reserving your position, where the risk of default is too high to accept.
• Paying into escrow or into your lawyer’s client account where the contract or local practice allows it.
• Paying and claiming, treating the overpayment as a debt to be recovered rather than a payment to be stopped.
• Agreeing a revised schedule, which developers under pressure sometimes prefer to a dispute.

Withholding is only safe when the payment genuinely is not yet due under your contract’s own trigger, not when you simply believe the work falls short. Get that distinction right, with dated evidence and proper notice, before you stop paying anything.