Why do I have to pay a reservation fee?
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Simon from Perth
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Conveyancing questions and answers
Question
I am looking to buy a new build property (not even started building), and have been asked to pay £2k for a MSE Exchange of Contracts. Is that standard?
Answer
It is common practice for a builder/developer to request a reservation fee is paid to them for a property that is either ‘off plan’ or in the process of being built.
We would recommend that the proposed reservation form is sent to a solicitor to review before you agree to pay the reservation fee and sign the reservation form. The reservation fee is then deducted off the final purchase price due once completion has taken place.
If the purchaser elects to withdraw from the transaction prior to Exchange of Contracts taking place then the builder/developer will retain the reservation fee that has been paid. It is common for the reservation fee to be between £2,000.00 to £5,000.00 depending upon the location of the development and price of the property.
Gareth Brooks, RMNJ Solicitors
Gareth Brooks
RMNJ Solicitors
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Hannah, 09 April 2017