Property reservation agreement

The wording of the agreement and the validity of its terms are both decisive. A reservation agreement is generally concluded under § 51 of the Civil Code, but its label alone does not determine the legal treatment of the fee. We check whether it is an advance payment, remuneration or a penalty and whether retaining it has a valid legal basis. For consumer agreements, the fairness of the terms and proportionality of the penalty must also be assessed. Even a reason attributable to the prospective buyer does not automatically mean that the entire fee is validly forfeited. Watch for wording forfeiting it whenever a transaction fails, including due to the seller, financing or an undisclosed encumbrance.

An express financing condition provides clearer rules. Even without one, however, it is necessary to assess whether there is a valid legal basis for retaining the fee; the agreement's silence about a mortgage does not itself preclude a refund claim. We therefore seek a financing condition: if the loan is not approved within the agreed period, the reservation ends and the fee is refunded. Agencies generally accept this if it is time-limited and the prospective buyer proves they genuinely applied for the loan.

It usually does if the transaction succeeds, but the agreement must expressly say so. In a three-party structure, the fee often also funds the agency's commission — you must check whether all of it counts towards the price or whether commission is an extra payment. The difference can be thousands of euros only apparent at settlement.

A two-party agreement is between the prospective buyer and seller; a three-party agreement also includes the agency as a full party. The weakest form is between the prospective buyer and agency alone: the agency does not own the property and cannot itself secure the transfer, while the seller is not bound at all. If you sign with an agency, we want the seller to be a party or their commitment recorded another way.

Often not. Templates may penalise only the prospective buyer, while the seller can sell to a higher bidder without consequences. We seek symmetry: the seller commits not to market the property during the reservation period and pays a contractual penalty if they cause the transaction to fail. The penalty must be agreed in writing with its amount or at least a method for calculating it (§ 544(2) of the Civil Code). An oral penalty or one without an ascertainable amount is unenforceable, a common reservation agreement error. A contractual penalty is payable even if the breach causes no loss to the entitled party (§ 544(1)); conversely, damages exceeding the penalty may be claimed only if expressly agreed (§ 545(2)). For an even firmer commitment to enter into the sale agreement, an agreement to enter into a future sale agreement can be used — we explain at consultation whether you need one.

Reservation agreements are short documents, so reviews are smaller instructions. The price depends on length and whether we also negotiate comments with the other party. Preparing an agency template depends on how many scenarios it must cover. In either case, we confirm price and timing within 24 hours — and honour what we agree.