Is a real estate agent allowed to charge a reservation fee?

Between a handshake and the law: Analysis and facts

The legal gray area of the formal requirement

To understand the dynamics of reservation fees in real estate purchases , you need to look at the Swiss Civil Code (ZGB). According to Art. 216 ZGB, purchase agreements for real estate require public notarization to be valid . This means : Only what the notary stamps is legally binding.

Herein lies the problem: Most reservation agreements are simple written contracts between the real estate agent/seller and the buyer. Since they are not notarized, they are formally invalid insofar as they concern the obligation to purchase. Specifically, this means that even if you have paid a reservation fee , you cannot be legally forced to buy the house. Conversely, you cannot force the seller to sell it to you, even if they have accepted the money. At this stage, the reservation fee is therefore more of a psychological than a legal constraint.

Refund claim: What happens when the deal falls through?

What happens to the reservation fee for a property purchase if the purchase falls through? Since the simple written agreement is invalid due to lack of form, the payment is often legally considered to have been made "without legal basis." In theory, the real estate agent or seller must fully refund the reservation fee (unjust enrichment).

In practice, however, many contracts contain clauses stating that if the buyer withdraws, the reservation fee for the property purchase is forfeited or used to cover expenses (notary fees, advertisements). You need to pay close attention here. Look closely .

• Permissible: The deduction of demonstrably verifiable costs (e.g. CHF 500 for the contract draft).
• Controversial: The retention of the full CHF 20,000 as a flat penalty. Courts often rule in favor of the buyer in such cases, as such a high reservation fee for a real estate purchase without a notarized contract effectively constitutes an inadmissible coercion to buy (withdrawal fee).

Where does the money go ? The escrow account.

A critical point regarding the reservation fee for a property purchase is the recipient. Never transfer the reservation fee to the seller's private account or a real estate agent's business account unless they have a separate escrow account. If the agent or seller goes bankrupt before the notary appointment, your money is gone (it will become part of the bankruptcy estate). The safest way: The reservation fee should be deposited into an escrow account held by the financing bank or into the escrow account of the notary public . There, it is safe and will later be directly credited towards the purchase price. Insist that the reservation fee is paid via this secure method.

The amount of the reservation fee for purchasing real estate

There is no legal upper limit, but there are market practices. A reputable reservation fee for a property purchase usually ranges between 10,000 and 30,000 Swiss francs , or about 1 to 2 percent of the purchase price. Demands that are significantly higher (e.g., 10% of the purchase price upfront) are considered dubious. The reservation fee is intended to demonstrate seriousness about the purchase, not to pre-finance the seller. If a real estate agent demands 50,000 Swiss francs or more as a reservation fee , you should be skeptical and ask for the reasons.

Advantages and disadvantages of the payment

Why should you even pay a reservation fee for a property purchase if it's legally dubious?

• Advantage: The property is "reserved." The real estate agent stops advertising and viewings. You buy yourself time to finalize your financing. The reservation fee gives you a breather in the bidding war.
• Disadvantage: Your money is tied up. If you back out (e.g., because the bank values the property lower), a dispute often arises over the repayment of the property reservation fee . Furthermore, the payment gives you a false sense of security: Another buyer could still win the bid at the notary's office with a higher offer, despite your reservation fee (since only the notarization is legally binding).

Checklist for the agreement

Before you transfer a reservation fee for a property purchase , check the written contract for the following points:

• Purpose: Is it clearly defined that the reservation fee for the real estate purchase will be credited towards the purchase price?
• Cancellation: What happens if you cancel? What happens if the seller cancels? (In the latter case, the property purchase reservation fee must be refunded 100% immediately ).
• Use: Does the reservation fee for real estate purchase only cover the reservation or does it also cover real estate agent fees?
• Bank reservation: Include a clause: "The property purchase reservation fee will be fully refunded if bank financing is not obtained."

The real estate agent as trustee

A professional real estate agent is aware of the issues surrounding reservation fees for property purchases . They will not exert pressure but rather ensure transparency. They do not use the reservation fee to secure their commission upfront, but to stabilize the process. Beware of agents who want to immediately include the reservation fee as their commission. The commission is only due upon successful completion of the sale (notarization). Offsetting the reservation fee against the commission in advance is unusual and risky.

Conclusion

The question "Can a real estate agent charge a reservation fee?" can be answered with yes, but you as the buyer need to know the rules of the game. A reservation fee for a property purchase is a standard market practice to ensure seriousness, but it is not a legally watertight purchase agreement.

Never pay without a written agreement. Ensure that the property reservation fee is paid into a neutral account and is not excessively high. Agree in writing on which costs can be deducted in the event of cancellation. Those who view the property reservation fee for what it is – a psychological hurdle and a way to save time, but not a guarantee – can use it strategically. Those who pay it blindly risk incurring costs.

Do you want to manage your purchase process and all payments securely and transparently to minimize risks associated with down payments? Loft offers you the digital platform to make the organization of your property purchase and the reservation fee transparent and secure.

Glossary

• Property reservation fee: A deposit paid by prospective buyers to confirm their intention to purchase and to temporarily remove the property from the market.
• Public notarization: The formal confirmation of a contract by a notary public. This is the only way a real estate purchase (and the obligation to purchase it) is legally valid in Switzerland.
• Article 216 of the Swiss Civil Code (ZGB) stipulates that real estate purchase agreements must be notarized. This is the reason why simple reservation agreements are often invalid due to lack of proper form.
• Escrow account: A trust account that is separate from the real estate agent's assets. The reservation fee for a property purchase is protected here in the event of bankruptcy.
• Cancellation fee: A contractual penalty for withdrawing from a contract. In the case of reservation fees for real estate purchases , this is often disputed if the contract was not notarized.