Following last year’s government consultation on conveyancing reform, recently published proposals by the government have confirmed its intention to introduce reservation agreements.
What is a reservation agreement?
A reservation agreement is an agreement between buyer and seller entered into at the offer stage of the transaction, and if either drops out before exchange of contracts then compensation must be paid.
A faster, less stressful process
The government hopes that by introducing a short standard reservation agreement it will make conveyancing faster, less stressful, and reduce the rate of failed transactions by getting the buyer and seller to commit earlier in the process.
A trial period
A draft reservation agreement was consulted on last year, and Shoosmiths residential property team were part of the consultation and feedback process.
A trial of these new reservation agreements has now been confirmed and is expected to start in 2020. Whether or not these agreements will become law or will be widely used in practice is unknown.