Termination Of Reservation Agreement

A booking contract can be used when buying new homes if a buyer reserves the right to purchase a property for a specified period of time. During this period (known as the “booking period”), the seller agrees not to sell to another party. As part of the agreement, the buyer pays a down payment (known as a “booking fee”). The booking period usually lasts 28 days. Since booking fees can be significant (up to $20,000 at the top of the market), the buyer`s agreement should be reviewed by a legal expert before signing. In practice, however, it is typical for buyers to sign booking agreements before calling their lawyer. The consumer protection code for owners, introduced in 2010 (hereafter the code), stipulated that the reservation agreement had to specify the costs for which the buyer could be responsible. The seller can deduct only one amount that was actually generated during the processing and holding of the booking, and it is unacceptable to deduct a fixed percentage or amount. When contracts are exchanged, the tax is deducted from the contribution which is then placed. However, the buyer may decide, at any time during the booking period, not to continue the purchase and to revoke the contract.

The tax is then refunded minus the fees, such as the seller`s legal and administrative costs. Booking agreements differ from exclusivity agreements, which are surpassed by a certain security of the buyer by setting a period during which the seller agrees not to enter into negotiations with another party. As part of a reservation agreement, the seller cannot enter into another such agreement with another party, but enter into negotiations. Before signing a booking agreement, sellers should verify that the terms comply with the code requirements and ensure that they do not enter into any other agreement for the same property with another party.

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