You Might Be Thinking…

“Once I sign a reservation agreement, there’s no way back.”
Not entirely true. A reservation agreement is only a preliminary arrangement, and if serious defects are discovered, you may have the right to:

• withdraw from the agreement,

• demand the return of the deposit,

• or negotiate a reduction in the purchase price.

Clients Often Ask Me…

• What should a fair reservation agreement include?

• When can a deposit be forfeited?

• Can I insert a clause that the deposit is refundable if serious defects are found?

• How does it work if the reservation is handled by a real estate agency?

• Should I pay the deposit directly to the seller, or into escrow?

Legal Framework in Brief

• Reservation agreements are not expressly regulated in the Civil Code → they fall under general contract rules (§ 1746(2) Civil Code, freedom of contract).

• A deposit (or “reservation fee”) is refundable if:

  • the purchase agreement is not concluded due to the seller,

  • serious defects are discovered that the buyer could not have known at the time of signing,

  • the agreement includes a refund clause.

• A blanket clause stating the deposit is always forfeited may be invalid as contrary to good morals or consumer protection rules.

Step-by-Step Approach

1. Before Signing the Reservation Agreement

• Insist on the right to a technical inspection or legal due diligence.

• Insert a clause: the deposit is refundable if the inspection reveals major defects.

2. When Defects Are Found

• Notify the seller without delay.

• Propose a reduction in purchase price.

• If the seller refuses, demand return of the deposit.

3. If the Seller Refuses to Refund the Deposit

• Assert your claim in writing.

• Prepare for possible litigation – often disputes are settled out of court if the agreement is one-sided.

Risks and Common Mistakes

• Paying the deposit directly to the seller → harder to recover if a dispute arises.

• No inspection clause in the agreement → weaker position in negotiations.

• Buyer’s passivity → if defects are not reported promptly, money may be lost.

• Blindly signing real estate agency templates → usually drafted to protect only the seller.

Lawyer’s Checklist

✔ Always require escrow for the deposit (lawyer, notary, or bank).
✔ Insert a clause on deposit refund if major defects are found.
✔ Have the agreement reviewed by a lawyer before signing.
✔ Do not pay until at least a basic property inspection is done.

FAQ

Is a reservation agreement binding?
Yes, but only to the extent that it was fairly negotiated. It cannot force you to buy a defective property.

Can the deposit always be forfeited?
No, such a clause is often invalid.

What if defects are found after signing the purchase agreement?
Then the regime of hidden defects applies – warranty rights under the Civil Code.

Can I avoid problems altogether?
Yes – the safest way is escrow for the deposit and legal review of the reservation agreement.