Reservation agreements have been proposed by the Government as a way of trying to prevent property transactions falling through.
The reservation agreement is still in draft form, but has been compared with Home Information Packs as being well-intentioned, but incapable of actually delivering.
At present in draft form, the Government’s proposed ‘reservation agreement’ has come under sharp criticism by a conveyancing firm which recently had access to the draft. It considers that the draft as it stands falls “way short” contains fundamental and obvious flaws against what is needed.
The draft is designed to reimburse either the seller or the purchaser to offset their wasted costs, in the event of one of them pulling out. Should either party withdraw from the transaction, then the party responsible would hand over money to the other party who had lost out.
In the draft document, sellers are apparently given only one exemption – if they cannot buy a replacement home.
David Knapp, solicitor at Hart Brown in Surrey said: “The fact is that that every seller would claim that. These proposals seem rushed and badly thought out. Much like Home Information Packs, the concept of a seller having to pay up-front sounds good but does not work in practice.”