What you should know about the reservation agreement
It happens time and again that prospective buyers have chosen a property but can't yet purchase it because the financing hasn't been approved by the bank. In times of limited property supply, this can be very frustrating. The solution: you can enter into a reservation agreement with a professional real estate agent.
When a real estate agent reserves a property for you, this is called a reservation agreement. This can be concluded if the purchase contract for an intended purchase cannot be signed until later for various reasons. With this agreement, the agent guarantees that they will not offer the property in question to any other interested party for a specified period.
Is there a reservation fee?
Such a service is often not free. Some real estate agents charge a reservation fee. This fee is paid for the agent to refrain from marketing the property for a specific period. It thus serves as protection for the agent in case the prospective buyer ultimately decides not to purchase the property. However, if the purchase goes through and a notarized purchase agreement is signed, the reservation fee is credited towards the agent's commission.
However, real estate agents often waive the fee, as disputes can arise, especially if the prospective buyer backs out. Furthermore, legally binding reservation fees are not so easy to agree upon in practice. A reservation agreement must be made by all parties involved: the prospective buyer, the seller, and the real estate agent.
It is important that the seller is informed about this agreement because the real estate agent, by temporarily remaining passive in marketing the property, is violating their obligations as stipulated in the exclusive brokerage agreement. This agreement, specifically the exclusive brokerage agreement, mandates the active management of the property and the identification of all potential buyers.
How long can a reservation be held for?
A property cannot be reserved indefinitely. However, the reservation period can be freely negotiated. Typically, a property is reserved for one to two months. While a longer period is theoretically possible, in such cases it may be advisable to conclude a preliminary contract.
Ultimately, the purchase agreement is what matters. A reservation agreement cannot prevent a withdrawal from the purchase. Until the notarization of the contract and thus the purchase of the property, ownership is not transferred to the prospective buyer, and the seller cannot be forced to sell the property.
Do you want to know what to look out for when buying or selling a property? Contact us! We'd be happy to advise you.
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https://www.breiholdt-voscherau.de/aktuell/m33P.html
https://www.recht-rotenburg.de/2018/08/12/eine-immobilie-reservieren/
Notes
For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.
Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.
Photo: © baranq/Depositphotos.com
About the author
Harry Mohr
Real estate agent (Chamber of Industry and Commerce)Harry Mohr, author of this article
