Condominium Reservation Agreement

Condominium Reservation Agreement

What Is a Condominium Reservation Agreement

A Condominium Reservation Agreement is a document used at the initial stage of purchasing a condominium unit in a condominium building. Its purposes are to:

• Express the buyer’s intention to reserve a unit

• Specify the timeframe for entering into a sale and purchase agreement

• State the reservation deposit amount and the conditions for refund or forfeiture

A reservation agreement is not a sale and purchase agreement and does not result in a transfer of ownership under the law.

Relevant Legal Basis

A condominium reservation agreement is governed by the general legal principles under:

• The Civil and Commercial Code concerning juristic acts and contracts

• The Condominium Act B.E. 2522 (1979) and its amendments,
  particularly in projects involving the sale of condominium units to the general public

Essential Contents of a Condominium Reservation Agreement

A proper and secure reservation agreement should clearly specify, for example:

• Details of the contracting parties (the reserving party / the developer)

• Details of the condominium unit (unit number, floor, size)

• The reservation deposit amount and payment schedule

• The period within which the sale and purchase agreement must be executed

• Conditions for refund or forfeiture of the reservation deposit

• Consequences if either party fails to proceed with the transaction

Differences Between a “Reservation Agreement” and a “Sale and Purchase Agreement”

Common Risks

• Unclear reservation deposit conditions

• Use of clauses stating “non-refundable in all cases” without fairness

• No definite timeframe for entering into the principal agreement

• Inconsistency with the subsequent sale and purchase agreement

Safe Practices When Using a Reservation Agreement

• Carefully read the refund conditions for the reservation deposit

• Verify whether the reservation deposit will be credited toward the down payment

• Avoid contracts that grant unilateral rights to only one party

• Retain all payment evidence at all times

Key Takeaway

A condominium reservation agreement is only a preliminary arrangement, not a sale contract.
Buyers should carefully review the reservation deposit conditions and the timeframe for entering into the sale and purchase agreement.

FAQ: Condominium Reservation Agreement

Q1: Is a condominium reservation agreement legally binding?
A: It has effect as a preliminary juristic act, but it is not a sale and purchase agreement.

Q2: Must the reservation deposit be refunded if the purchase does not proceed?
A: This depends on the terms specified in the reservation agreement.

Q3: Is the reservation deposit considered a down payment?
A: Generally no, unless the agreement expressly states that it will be credited as a down payment.

Q4: Can the seller forfeit the reservation deposit in all cases?
A: No, if the terms are unfair or contrary to the law.

Q5: How many days after reservation should the sale and purchase agreement be executed?
A: The period should be clearly specified in writing in the reservation agreement.

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