It is important not to confuse the payment associated with a reservation agreement with the deposit payment under a CPCV.
Source: Idealista News
How does placing a reservation on a property work? Rules and precautions to take !
The property reservation agreement is probably (along with the purchase and sale promise contract) one of the most widely used contractual models in the context of real estate brokerage relationships, especially when it comes to residential properties. But what is it for? And what precautions should be taken? Does the new simplex have any kind of impact? We explain everything in this article with the help of legal experts.
In general terms, “reserving” a property consists of demonstrating the intention to acquire (or lease) a property, on terms acceptable to the respective owner, and includes the payment of a (reduced) amount that demonstrates the good faith of the parties in carrying out the transaction, prior to the negotiation and/or signing of the acquisition contract (whether the promissory contract or the definitive contract), begins by explaining José Pinto Santos , associate in the Real Estate Department at SRS Legal , in this article prepared for idealista/news.
As a rule, the reservation agreement includes at least identification of the property, the owner, the potential buyer (or tenant), the amount paid as a reservation and the deadline for concluding the desired contract. Under legal terms, the reservation agreement is concluded with the intervention of the real estate measurement company.
What is the property reservation agreement for?
In particular, in the context of the purchase and sale of real estate, the reservation agreement essentially serves to guarantee a period of exclusivity to the prospective buyer and establish one of the most important terms of the transaction – the price.
Upon payment of a sum (usually reduced), the property must be withdrawn from the real estate market for a certain agreed period of time, allowing:
- the potential buyer to analyze the situation of the property, namely through a legal audit, to verify the existence of possible contingencies that may (or may not) impact the negotiations of the intended acquisition; and
- to the parties, negotiate and agree on the terms of the contract(s) to be concluded.
It is important not to confuse the payment associated with a reservation agreement with the payment of a deposit under a promissory purchase and sale agreement.
Law 15/2013, of 8 February , which regulates the activity of real estate mediation, clarifies that these amounts – unless expressly stipulated otherwise by the parties – are not in advance of the purchase price or of expenses arising on account of the transaction, and therefore the non-compliance regime established in article 442 of the Civil Code does not apply to them (i.e., double refund (in case of non-compliance by the seller) or retention of the deposit (in case of non-compliance by the buyer)).
The recipient of the reserve amount is not the potential seller (as is the case in a promissory contract), but rather, as a rule, the real estate measurement company responsible for the transaction, which must ensure that the amount is returned to the person who provided it, in the event that the intended transaction does not materialize.
In any case, what can be done to avoid risks?
Firstly, the reservation agreement must be formalized in writing, and does not necessarily have to follow the pre-prepared minutes prepared by real estate measurement companies.
The reservation must include at least the following essential elements:
- the identification of the potential seller , the potential buyer and the brokerage company;
- identification of the property that is the subject of the transaction;
- the amount given as a reserve;
- the period of exclusivity,
- the deadline for concluding the promissory contract and/or for granting the public deed;
- conditions for the acquisition of the property (for example, the completion in terms satisfactory to the buyer of a legal audit of the property, or the approval of bank financing);
- the destination to be given to the reserve amount, that is:
- the refund to the potential buyer, if the deal does not come to fruition;
- or the imputation of the amount in the amount to be paid as a deposit or price when concluding a promissory purchase and sale agreement or the purchase and sale deed, as applicable.
New licensing simplex: is additional care needed?
The recent legislative changes introduced by Decree-Law No. 10/2024 of 8 January , in particular, paragraph y) of No. 1 of article 1 , and article 19 of the transitional rules , within the scope of the so-called licensing simplex, among other things, allow the purchase and sale of real estate without the presentation of a usage license.
Therefore, to avoid surprises, it is particularly important that the reservation establishes from the outset that the intended acquisition will be preceded by the delivery of the usage license (even if this is not mandatory for granting the deed) and/or the carrying out of a legal audit of the property, with the transaction or the agreed price being conditional on the non-existence of contingencies in terms of licensing.
For this reason, it is important not to give in to the pressure of completing the transaction in a very short space of time. A reasonable period of time must be guaranteed to carry out this legal audit, in order to allow the potential buyer to validate the property’s documentation (in particular, in terms of licensing), including, if necessary, consultation of the processes that are archived at the City Council.
