Safest-Agent DLUP

What is it?

A Reservation Agreement is an agreement between the Buyer and Seller. The Buyer reserves the right to purchase the property and the Seller agrees not to sell to another party. If either breaks the agreement they agree to pay the other party a compensation amount. This protects the Buyer from being gazumped and the Seller from gazundering. More importantly the sale proceeds with both Seller and Buyer committed to each other subject to contract.

How does it work?

  1. A compensation payment level is agreed by all parties, typically £10,000 - £20,000.
  2. Buyer and Seller sign the agreement digitally.
  3. A fee is paid to Gazeal, and then Gazeal guarantees to pay the compensation in the event that the agreement is broken.
  4. Buyer and seller move forward with the confidence that all parties are fully committed.

How much does it cost?

The fee paid to Gazeal depends on the compensation payment level. For a £10,000 guarantee, the fee is £1,800 including VAT, and for a £20,000 guarantee, the fee is £3,000 including VAT. Lower and higher compensation amounts with corresponding fees are available.

The cost of the agreement can be paid by the buyer, seller or split between buyer and seller. We also offer an option where the upfront fees are paid by us, and in this instance we split the proceeds of any compensation payment with the innocent party.

How does the innocent party get paid?

Gazeal is responsible for making the payment to the innocent party and recovering it from the defaulting party.

Is this a deposit?

No, the non-refundable fee is paid to secure financial commitment, and the compensation payment is only paid if the agreement is broken.

Can a buyer withdraw for a bad survey?

The agreement makes provisions for various scenarios that would mean there would be no penalty for withdrawal, such as:

  • If the property is down-valued due to a survey or urgent repairs identified and they cannot be renegotiated.
  • If the chain breaks above the seller or below the buyer.
  • If the property has a bad title confirmed by the conveyancer.
  • If the buyer is unable to secure the finance.
  • Agreed timelines not met and neither party wishes to continue (subject to reasonable proof).
  • Special Conditions can be added to the agreement to cover specific areas of concern for individual cases, they will have to be agreed by both parties.

In events where the sale cannot continue through no fault of either party, any fee paid will be refunded in full.

Can the seller withdraw without penalty?

There are numerous reasons for the Seller to withdraw without the potential liability, such as:

  • Incorrect information given by the Buyer as to their position.
  • Agreed timescales not met by the Buyer.
  • Chain Break Down below the Buyer.
  • General reasons agreed by ‘Mutual Consent’ with the Buyer.

How does the agreement work in a chain?

If at any point the chain collapses then the agreement simply ‘PAUSES’. The agreement is NOT DEPENDENT ON ALL OF THE CHAIN having a reservation agreement.