Together with housing boom developers started most often to compel the customers to conclude the reservation agreements in order to book a good trading offer of property. Sometimes it may turn out to be risky to sign such agreement because developers often do not have necessary permissions to start constructing a building and it is usually difficult to terminate this agreement unilaterally by a customer because of unfavourable terms and conditions.
In real estate trade it is a custom, that a person who wants to buy a property from a developer (on the primary market) is required to signing so-called reservation agreement. Developers usually offer to sign this agreement even before they receive a building permit and start the construction of a building. The buyer who signs a reservation agreement gains a guarantee of priority to buy a specified property form developer and developer has a reasonable assurance that he will sell it. On the other hand on the basis of reservation agreement developer can estimate what is the consumers? interest in planned investment.
Since the reservation agreement is not defined in Polish law, the parties of such agreement obligate themselves to fulfil only the obligation that are explicitly envisaged in the agreement and result from the general regulations of law. In this context, it is important to distinguish reservation agreement from the preliminary agreement. The prior usually precedes the latter one and contains only the general declarations of both parties. In turn the preliminary agreement is governed by relevant provisions of the Polish Civil Code and can be concluded only after both parties establish in detail the conditions of the future sale of property. It is also usually connected with the payment of a part of the price, which is generally higher than the small fee paid at the reservation agreement?s conclusion.
The purpose of the reservation agreement is protection of buyer?s and developer?s business interests on the very initial stage of transaction. Such agreement obligates both parties to observe regulations concerning the price of property and the date of sale but it often can cause some risks for the buyers. This risk is involved with situation, when developer fails to receive a building permit or any other legal decision, which is necessary during investment process and consequently is not able to construct a building. In such a case, in reference to patterns of reservation agreements that are in common use, recovery of reservation fee can turn out to be quite difficult. Besides, even if a developer returned this fee, the consumer would probably not receive interests on reservation fee. Additionally the reservation agreement does not grant the consumer the right to force the developer to conclude the final sale agreement. This right is ensured only should contracting parties sign the preliminary agreement in form of notary deed.
One can notice that sometimes natural persons or entrepreneurs trade with rights and obligations arising from the reservation agreements. They sign mentioned agreements concerning real estate situated in good localisation and then try to assign them for a higher price. This kind of trade is legal because it is based on the freedom of contracting. Moreover, in order to assign obligations arising from the reservation agreement it is necessary to gain developer?s consent. Mere assignment of rights does not require such a consent.
Somebody who decides to purchase rights and obligations arising from the reservation agreement needs to remember about the abovementioned risks involved in this kind of agreements. From the new buyer?s point of view the best solutions is to agree that the price of assignment will be paid, provided that that developer shall conclude the preliminary agreement. This provision decreases negative effect of developer?s failure to obtain the legal permission for construction of a building or his refusal to sign the preliminary agreement.
During the last few months the prices of properties and the demand for them were decreasing and therefore consumers who intended to buy a property do not have to act under the pressure of time and prices. This situation can cause developers to stop insisting on conclusion of unfavourable reservation agreements by prospective customers. But even if one has to sign reservation agreement, one should remember about precise and thorough verification of such agreement or to counsel with a professional in order to avoid described problems and risks.
