𝗟𝗼𝗰𝗸 𝗜𝗻 𝗬𝗼𝘂𝗿 𝗦𝗮𝗹𝗲 𝗼𝗿 𝗣𝘂𝗿𝗰𝗵𝗮𝘀𝗲 𝘄𝗶𝘁𝗵 𝗢𝘂𝗿 𝗥𝗲𝘀𝗲𝗿𝘃𝗮𝘁𝗶𝗼𝗻 𝗔𝗴𝗿𝗲𝗲𝗺𝗲𝗻𝘁𝘀!

𝗟𝗼𝗰𝗸 𝗜𝗻 𝗬𝗼𝘂𝗿 𝗦𝗮𝗹𝗲 𝗼𝗿 𝗣𝘂𝗿𝗰𝗵𝗮𝘀𝗲 𝘄𝗶𝘁𝗵 𝗢𝘂𝗿 𝗥𝗲𝘀𝗲𝗿𝘃𝗮𝘁𝗶𝗼𝗻 𝗔𝗴𝗿𝗲𝗲𝗺𝗲𝗻𝘁𝘀!

What is a Reservation Agreement?

A Reservation Agreement is an agreement between the Buyer and Seller. The buyer reserves the right to purchase the property and the seller agrees not to sell to another party. If either breaks the agreement they agree to pay the other party a compensation amount. This protects the Buyer from being gazumped and the seller from gazundering. More importantly the sale proceeds with both seller and buyer committed to each other subject to contract.

How long is the agreement for?

The term of the agreement is set by both parties prior to the start of the agreement and can be any time up to six months. It helps keep both parties working towards and agreed timeline. Seller and Buyer should exchange contract beforethe expiry date, if either party is not ready to exchange they must provide a reason why. The agreement term can be extended by mutual consent if one party is delayed and there is no charge for any extensions.

What scenarios do not carry a compensation payout?

• If the property is down valued due to a survey or urgent repairs identified and they cannot be renogotiated.
• If the chain breaks above the seller or below the buyer
• If the property has a bad title confirmed by the conveyancer
• If the buyer is unable to secure finance
• Agreed timelines not met and neither party wishes to continue (subject to reasonable proof)
• Special conditions can be added to the agreement to cover specific areas of concern for individual cases, they will need to be agreed by both parties.
• In the event  where the sale cannot continue through no fault of either party then the fee will be refunded in full.

How much does it cost?

Neither party have to pay the compensation amount upfront, instead our law society partner provide a guarantee to pay the compensation in the event that the agreement is broken. The fee for this guarantee starts from as little as £600 including vat. This guarantees a compensation payment to the innocent partyof £2000. Although our law society partner can guarantee amounts up to £100,000 if required.

Who pays the initial fee?

This is agreed upfront but Oliver James always recommends this is split 50/50 so both the buyer and seller have committed financially.

Is this a deposit?

No, this is a fee for arranging a pre -exchange agreement and the certainty of compensation if the sale falls through unreasonably. This does not replace the need for a formal deposit that is required from the buyer at the time of exchange of contracts. In cases where the seller agrees to offer to refund this fee on completion of the sale the buyer will be repaid any fee for this agreement.