Reservation Agreements for House Buyers
Buying property through an Estate Agent may now include a ‘Reservation Agreement’ AKA ‘Reservation Contract’.
It is a ‘legal document’ that can cost you DEARLY.
The principle / idea was intended to sort out the ‘time wasters’ from ‘legitimate buyers’. Based on both the vendor and the buyer signing an agreement to buy with substantial penalties if either party doesn’t complete with the purchase.
The contract has ‘small print’ outlining the Terms and Conditions. By law there has to be a 14 day ‘cooling off period’ after signing the document.
Estate Agents use the relatively new ‘Reservation Agreement’ as ‘added revenue’. If they do not sell the property, they still receive their commission. The suppliers of the document also receive their payment.
What are the the actual details though?
Both parties to the possible sale sign to agree to pay a considerable sum of money if the sale doesn’t go though completely. If either party decides to ‘pull out’ from the sale a named ‘sum’ has to be paid.
Who receives the money which will be £1,000s or £10,000s of thousands of pounds?
The T&C include exceptions for completion. However, they have to be in written format and passed through to the ‘Contract provider’ for arbitration. An additional fee is required for the ‘service’.