Flat reservation agreement

Once we have set our sights on a particular flat and know that we will want to work with a given developer, we can sign a reservation agreement. Because this type of agreement is not regulated by the Developer Act, it is worth familiarising yourself with the most important information that should be included in it.

• How does a flat reservation agreement work?
• What should you pay attention to?
• Flat reservation agreement – what should the document contain?

How does a flat reservation agreement work?

By signing a reservation agreement for a flat that interests us, we most often undertake to pay a certain sum towards the reservation. In many cases it is a percentage of the property's value, but in the absence of legal rules it can be any amount. The developer, in turn, undertakes to reserve for us the flat named in the agreement and, consequently, cannot offer it to another buyer (note that an exclusivity clause should be included in the document). A flat reservation agreement does not have to take the form of a notarial deed (akt notarialny) and is usually signed at the developer's office.

Let us remember that the lack of legal regulation of this type of agreement has a number of consequences. Since the law does not specify what a flat reservation agreement should contain, there is a great deal of freedom in how it is drafted. As potential buyers, we must pay particular attention to its content. This will help us avoid many unfavourable situations that may arise from imprecise wording in the agreement.

What should you pay attention to?

When is a reservation agreement beneficial for a potential buyer of a property? When we have not yet obtained a mortgage for the flat and are unable to pay the full amount to the developer. Let us remember that a reservation agreement does not give us a right to the flat; the developer may change its mind and decide to sell the property to another customer. There are two types of reservation agreement:

An agreement without elements of a preliminary agreement (umowa przedwstępna) – neither party undertakes to conclude another agreement finalising the transaction. As the buyer we are not obliged to conclude a developer agreement, but the same applies to the developer, who may withdraw and sell the property to another customer.

An agreement with elements of a preliminary agreement – in this arrangement the parties commit to further cooperation, which results in the signing of a developer agreement. In this case you should look closely at the provisions of the agreement and at the developer itself, since withdrawing from such an agreement is difficult.

Remember to read the provisions on payment for the reservation carefully. The developer may treat the fee we have paid as part of the total sum we have to pay for the flat. It is possible, however, that the agreement treats the reservation fee separately – so we pay for the flat plus for the reservation. Before you sign the agreement, read the provision on a possible refund of this fee and do not rely on assurances from a consultant at the developer's office who says "we refund advance payments if need be". Information on the refund of the advance payment (zaliczka) should be included in the text of the document.

Before signing a reservation agreement it is worth seeking appropriate legal advice. In this way we will eliminate any questionable provisions it may contain. The agreement should define precisely what both parties understand by the term "reservation".

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Flat reservation agreement – what should the document contain?

A clear reservation agreement should contain the following details:

1. personal data: first name, surname, PESEL number, ID card series and number, correspondence address, telephone, contact e-mail,
2. subject of the transaction: type of property, official address, land and mortgage register (księga wieczysta) number, floor area of the unit, size of the share being acquired,
3. a detailed explanation of the term "reservation",
4. payment details: bank account number with the details for transferring funds or refunding the advance payment,
5. components of the transaction: flat/house/terraced unit, share in the land, parking space/storage room – each component should be listed with its individual price,
6. size of the share in the property being acquired,
7. date of handover of the subject of the agreement,
8. the owner's statement that the legal status shown in the land and mortgage register is up to date,
9. the owner's statement that there are no outstanding financial or legal issues and no obligations towards third parties,
10. information on any own contribution and its terms,
11. payment schedule,
12. information on attachments resulting from the nature of the property,
13. space for initials (every page of the document) and a full signature on the last page,
14. the date and place of concluding the agreement.

EVERYTHING ABOUT THE PRELIMINARY AGREEMENT

Remember to read the agreement carefully and without haste. Many problems in working with a developer stem from imprecise provisions or from different understandings of the term "reservation". We strongly recommend seeking the advice of experts who will help you prepare properly for buying a property. Contact the REMAX Gold office and find the flat of your dreams.