For many international buyers, the reservation agreement is the first legally meaningful step in a property transaction.
It often appears straightforward: a deposit is paid, the seller agrees to reserve the property for a defined period, and both parties move toward due diligence and closing.
In practice, however, reservation agreements vary significantly between countries. The rights you acquire, the obligations you assume, and the recoverability of your deposit can differ dramatically depending on the jurisdiction.
Understanding these differences before signing can prevent costly mistakes later in the transaction.
What is a Reservation Agreement?
A reservation agreement is typically a preliminary contract between buyer and seller that removes a property from the market for a specified period.
The agreement usually includes:
- Property details
- Purchase price
- Reservation amount or deposit
- Exclusivity period
- Conditions for refund
- Timeline for progressing to the next contract stage
For international buyers, the reservation period is often used to:
- Conduct legal due diligence
- Verify title ownership
- Review planning permissions
- Arrange financing
- Organize international fund transfers
- Complete compliance and source-of-funds checks
The critical question is not whether a reservation agreement exists, but what rights and obligations it creates.
Spain: Understand the difference between reservation and arras
Spain often involves two distinct stages.
Stage 1: Reservation Agreement
A reservation agreement typically secures exclusivity for a short period while lawyers perform due diligence.
The reservation fee may range from a few thousand euros to a percentage of the purchase price.
Key questions to ask:
- Is the reservation deposit refundable?
- Under which circumstances?
- Who holds the funds?
- How long is exclusivity granted?
Stage 2: Contrato de Arras
This is where many international buyers face unexpected exposure.
The Arras contract generally creates stronger commitments:
- If the buyer withdraws, the deposit may be forfeited.
- If the seller withdraws, the seller may be required to return double the deposit.
Before signing Arras, buyers should ensure:
- Legal checks are substantially complete.
- Financing is secure.
- International funds can be moved within required timelines.
Many buyers focus on the property and underestimate the financial execution required afterward.
Portugal: Reservation Agreements are often developer-driven
Portugal's market frequently uses reservation agreements for new developments and off-plan projects.
Unlike Spain, practices can vary considerably between developers.
Common provisions include:
- Reservation fee
- Fixed exclusivity period
- Conditions for conversion into a Promissory Purchase Agreement (CPCV)
The CPCV Stage
The Contrato-Promessa de Compra e Venda (CPCV) is the agreement that creates substantial legal commitment.
Typical deposits can range from 10% to 30%.
Buyers should carefully review:
- Completion deadlines
- Construction milestones
- Refund conditions
- Developer default provisions
Particular attention should be given to international payment logistics.
A buyer may have sufficient liquidity but still encounter delays due to:
- Currency conversion
- Banking compliance reviews
- Source-of-funds verification
- Cross-border transfer limits
Missing a contractual deadline can create consequences regardless of the reason behind the delay.
Greece: Reservation Agreements are often less standardized
In Greece, reservation agreements tend to be less standardized than in Spain or Portugal.
Practices vary significantly between:
- Individual sellers
- Local agencies
- Developers
- International brokerage networks
Reservation deposits are common but contractual structures differ widely.
Particular areas of attention
Before paying a reservation deposit, buyers should verify:
- Ownership status
- Existing encumbrances
- Building legality
- Planning compliance
- Tax registration requirements
International buyers frequently underestimate the amount of documentation required before completion.
In Greece, delays may arise from:
- Tax number issuance (AFM)
- Power of attorney arrangements
- Land registry verification
- Engineering certifications
- Banking compliance reviews
A short reservation period can become challenging when several administrative processes must be completed simultaneously.
The most important clause: Refundability
Across all jurisdictions, the most important question is often:
Under what circumstances is my reservation deposit returned?
Buyers should obtain written clarity on:
Refundable if
- Legal due diligence reveals material issues
- Financing cannot be obtained (if explicitly stated)
- The seller withdraws
- Property information proves inaccurate
Potentially Non-Refundable if
- The buyer changes their mind
- Deadlines are missed
- Required documents are not delivered in time
- Conditions stated in the agreement are not fulfilled
Assumptions are dangerous. If a refund condition is not written into the agreement, enforcing it later may be difficult.
The international payment problem
One of the most common misconceptions in cross-border real estate is:
"The money is available, so the transaction is ready."
Availability of funds and ability to settle are not the same thing.
Buyers should verify:
- Which account will send the funds
- Which jurisdiction holds the funds
- Whether compliance checks have been completed
- Currency conversion requirements
- Expected transfer timelines
Many transaction delays occur not because buyers lack funds, but because moving funds across borders takes longer than expected.
A reservation agreement checklist
Legal
- Ownership verified
- Encumbrances reviewed
- Building legality confirmed
- Reservation terms reviewed by legal counsel
Financial
- Deposit amount understood
- Refund conditions documented
- Funding source prepared
- Currency requirements confirmed
Operational
- Exclusivity period sufficient
- Due diligence timeline realistic
- Closing schedule achievable
- Required documentation identified
Reservation agreements represent the moment when a property transaction begins transitioning from interest to obligation.
For international buyers, the greatest risks usually do not come from the property itself.
They come from misunderstanding contractual commitments, underestimating payment logistics, and assuming that cross-border transactions operate as smoothly as domestic ones.
The buyers who complete transactions successfully are rarely those who move fastest.
They are the ones who understand exactly what they are committing to before they sign.