Once the offer has been agreed upon, the Buyer and Seller sign the agreement and are bound by its terms. We then formally agree the sale in writing and remove the property from the market. The sale is secure for both sides and they are bound. If either party withdraws for any reason, other than agreed upon, the other side is entitled to a compensation payment.

Both the buyer and the seller each pay a Reservation Fee typically £450 + VAT. (£540 inc vat). This total fee of £1080 is normally split (£540 each) or very occasionally, by prior arrangement, one side pays the total.

If the seller already has an RA on their sale with us they wont need to pay for another one on their purchase RA. 

This secures a £5,000 commitment to you both from each other. This compensation payment is paid to the innocent party The reservation fee and commitment can vary. This amount represents the minimum fee and level of commitment.

This fee is paid to Gazeal who Homes Partnership uses to administer this. Gazeal is the UK’s No.1 provider used by over 1000 agents; they are approved by the Law Society and Propertymark.

The fee is similar to an insurance premium and not a deposit; there is a lot of work involved in the setup. The fee is to enable a cast iron 100% guarantee that compensation is due the injured party receives it without needing further legal costs to recover. Homes Partnership do not receive any money from setting up a reservation fee.

Whatever level of commitment was agreed upon, a minimum of £5,000.

Gazeal will be responsible for making the payment to the innocent parties and then recovering it from the defaulting party.

Neither the Buyer or Seller put down a deposit. Instead we ask for a Reservation Fee to set up the legal agreement It’s like paying for an insurance policy. (Minimum £450 + vat / £540 inc vat). If there is a reasonable withdrawal, such as a chain break or buyer has failed to secure finance from at least two lenders – Gazeal would refund whoever has paid the fee as the agreement cannot continue under reasonable circumstances. Gazeal who set it up have the final decsion on this.

Although the £450 + VAT (£540 inc vat) is low, both parties are committed to a minimum of £5,000 if either breaks the agreement. These amounts can vary.

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

• Down Valuation due to survey not re-negotiable
• Bad survey with unknown essential repairs costing more than 3.5% of the purchase price
• Bad Title
• Chain Break Down above the Seller or Below the Buyer
• General Reasons agreed by ‘Mutual Consent’ with Seller
• Inability to get a Mortgage with two separate lenders.

Any reason would need evidence of proof behind it, not just a verbal reason.

Quite often Gazeal are happy to refund the setup fees (or save them for the next transaction) when this happens, as it is no one’s fault.

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

• The Buyer gave incorrect information 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

The agreement can be signed BUT NO PAYMENT IS TAKEN if the chain is incomplete. Once complete, the Buyer can start the agreement by making their Reservation Fee payment. 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. Of course, in an ideal world the whole chain would have Reservation Agreements, but any Reservation Agreements make that part of the chain more secure which improves security.

Either party can extend the agreement by ‘Mutual Consent’. In the event that there is no ‘Mutual Consent’ then either party can walk away with no penalty.

All pre-set timescales can be extended by ‘Mutual Consent’. In the absence of ‘Mutual Consent’ either party can walk away, without penalty, if there is no extension agreed.

If the seller hasn’t found a new home a special condition can be added to cover this – The Buyer acknowledges that the Seller is looking to purchase another property with the proceeds of the sale, so the sale is contingent on the seller agreeing on the purchase of another property and the parties, therefore, agree that failure to Exchange Contracts on the Sale because of the Seller not having agreed to purchase another property shall not be deemed unreasonable. The buyer would be refunded in this case.

It is agreed that the seller will split the compensation payment with the agent. This is typically set at 50%. This is agreed in advance with the seller. Most importantly the agent receives ‘greater security’ for their sales and better protection of their sellers and buyers if no compensation due.