The ‘reserve agreement’ is a document prepared by a real estate agent. Each one has their own. It’s normally the first document the agent will show you. Despite its name, it does NOT reserve the property in your name. The ‘reserve’ is incorrectly titled and terribly misleading.
Purpose. To put your offer for the property in writing. The reserve contains a blank line where you write your offer. It contains other items too, some might be against your interests. It must be understood before signing. See Agent’s Fee below.
Reserve the Property. The reserve agreement does not take the property off the market and reserve it in your name UNLESS it says this on the reserve. Most of them don’t say this.
Payment. You pay a deposit of between 1% to 5% of the property’s listed price when you sign the reserve. The seller has a fixed period of time, normally a week, to accept or reject your offer. If the seller accepts, you must buy the property or you lose the deposit. If the seller rejects, or if the time period lapses, they must return the deposit.
Agent’s Fee. Some agents charge you, the buyer, for showing you the flat. They collect this fee when you pay the deposit with the reserve. So if the seller rejects your offer, the agent will not return the entire deposit. They’ll keep part, or all of it, as their fee. This charge is not included in the property’s listed price. And it might not be refundable. It must, however, be written somewhere on the reserve. Read it carefully before you sign.
The Reserve’s agreement legal effect
None. A ‘Reserve’ agreement does not reserve the flat in your name and it does not take the flat off the market. In fact, an agent may show the offer on your reserve to other prospects to get a better offer. It’s perfectly legal.
What the Buyer can do: Ask for a right of first refusal. Write in the Reserve: “The Agent can’t sell the flat to anyone else during the reserve period without offering it to me first”. You might have to pay a higher deposit and the Agent might say no.
What the Buyer must do: Give yourself time. If the seller accepts your offer, they’ll want you to pay a 10% down payment and sign the pre-sales (arras) contract promptly. But you can’t proceed unless you’re ready to buy. You need time to conduct due diligence, i.e. thoroughly investigate the property’s legal status, the building’s physical condition and other items. Propose to write in the reserve: “If the Seller accepts my offer, then I am granted 15 to 40 days to investigate the property before I pay the down payment.” Agents know you need some time and might accept this clause. Some won’t. It depends on what the seller says and on how many prospects are interested in the property.
To Whom do I Pay the Reserve?
1) The Seller. It’s best to pay the seller. If they don’t accept your offer, they have to return the deposit.
2) The Real Estate Agent. In Barcelona, the agent usually requires the buyer to pay them the reserve. The agent must hold the money ‘in trust’ for the seller. In trust means they can’t spend it. Before paying the agent, however, do two things:
a) See their written authorization signed by the seller to collect the money on the seller’s behalf and
b) Get a written promise to return the money to you if the offer is rejected.
Regardless of who you pay, get a detailed, dated and signed receipt back. It’s needed later when you sign the final deed. If the seller or agent refuses the above requests or doesn’t understand, etc., you should probably keep looking.
Learn more in our article: The Reservation Contract in Barcelona: Enough to Buy a Property?