Reservation contracts for house purchases

• Private Clients
• Real Estate
• SME

Professional real estate sellers often conclude a so-called “reservation contract” with prospective buyers first. In this contract, the buyer agrees to pay a deposit (often based on the agent’s expected commission). The seller undertakes not to sell the property to a third party for a certain period of time, i.e. to reserve the property. It is often agreed that the deposit will be forfeited if the buyer decides not to buy the property after all. The seller is thus to be compensated for his efforts, which are ultimately in vain.

Real estate purchase contracts must be publicly notarised. The Federal Court decided that this also applies to reservation contracts. In most cases, however, reservation contracts are not publicly notarised. This means that despite a reservation contract, the seller is free to sell the property to a third party, whereas the buyer can reclaim the advance payment made.

The buyer and the seller can agree in a non-publicly notarised contract that the buyer should compensate the seller for his expenses. However, such a contract is only valid if it is not “too close” to the purchase contract. The remuneration of the expenditure may not represent a disguised payment of the purchase price.