THE RESERVATION AGREEMENT- WHERE THE DEAL REALLY BEGINS

The small contract that decides whether your deposit is safe

When your offer is accepted, the first thing you sign is the reservation agreement. It is a short document, but it does the heavy lifting. It takes the unit off the market, locks the price for you, and sets the rules for everything that follows. Usually you pay a deposit, often around 10%, into an escrow account or other agreed stakeholder account at the same time.

This is the moment your money leaves your hands, so the wording has to work for you, not just for the seller. Keep two simple questions in your head the whole time: what exactly am I paying for, and what gets my money back.

One thing many buyers miss: the agreement should set a clear reservation period. That is the window that covers the due diligence and ends with signing the sale and purchase agreement. Inside that window, give the due diligence its own defined number of days, so nobody is left guessing.

A good reservation agreement should spell out:

• The exact unit, the price, and everything included, such as furniture, appliances, and parking

• A deposit held in escrow or another agreed stakeholder account, not paid straight to the seller, and counted toward the final price

• A clear clause that makes the deposit refundable if the due diligence fails or the foreign quota turns out to be unavailable

• The reservation period, and the due diligence period inside it, ending with the signing of the sale and purchase agreement

• Who pays which fees and taxes on transfer day

• A fair chance for the seller to fix problems. If your lawyer finds something, the seller usually gets an agreed period, often seven to ten days, to put it right. If they fix it, the deal continues. If they cannot, your deposit comes back.

• What happens if either side simply walks away

At a minimum, the due diligence written into the agreement should cover:

• The title

• Zoning and building regulations

• The building permit

• The house book (Tabien Baan)

• The servitude, meaning the easement rights for road access

• The foreign quota status of the building (for foreign freehold purchases)

• The sale and purchase agreement itself

• For a new building, the construction agreement as well

After that, add anything else that matters to you. Each of these points can be the exact line between getting your deposit back and losing it. So if something is important, it belongs in here, in writing, before the money moves.

A handshake and a friendly chat are lovely, but they are not the contract.

I am not a lawyer, so this is not legal advice. But read this document slowly, and ask your lawyer to add anything that protects you before you sign.

𝑨 𝒈𝒐𝒐𝒅 𝒓𝒆𝒔𝒆𝒓𝒗𝒂𝒕𝒊𝒐𝒏 𝒂𝒈𝒓𝒆𝒆𝒎𝒆𝒏𝒕 𝒊𝒔 𝒄𝒉𝒆𝒂𝒑 𝒊𝒏𝒔𝒖𝒓𝒂𝒏𝒄𝒆. 𝑨 𝒃𝒂𝒅 𝒐𝒏𝒆 𝒊𝒔 𝒂𝒏 𝒆𝒙𝒑𝒆𝒏𝒔𝒊𝒗𝒆 𝒍𝒆𝒔𝒔𝒐𝒏.

If you’re curious about what types of villas currently offer the strongest investment potential on the island, you can browse Jane’s latest Koh Samui property listings here.