New-Build Reservation Fee: When It Is Refunded and When It Is Forfeited

A reservation fee is usually refunded if the purchase does not go ahead for a reason on the developer's side, or if the contract expressly provides for a refund, for example when a mortgage is refused. It is most often forfeited when the buyer withdraws from the purchase without a reason set out in the contract. What decides the matter is therefore the specific wording of the reservation contract, not market custom.

What the reservation fee is for

A reservation fee is a payment the buyer makes to the developer in return for a chosen flat being reserved for a set period. During the reservation the developer does not offer the flat to other interested buyers, and the buyer gains time to arrange financing, check the project and prepare the contract for a future purchase agreement.

It is important to distinguish exactly what you have paid. In practice several forms are used: a separate payment for the reservation, a deposit that is credited towards the purchase price, or an amount described as a contractual penalty or withdrawal fee. Each has different legal consequences and different rules on refunds. Read the name used in the contract carefully.

When the fee is usually refunded

Many developers refund the fee in situations the buyer cannot influence. These must always be described in the contract. Typical cases:

• The bank does not approve your mortgage. Some developers state a refund in this case expressly, others do not. Ask for written proof of the bank's refusal and check by when you have to submit it.
• The developer does not present the contract by the promised deadline or offers different terms from those at the time of reservation.
• The unit stops being available, for example because the developer sells it to another buyer or withdraws it from the offer.
• The project changes substantially – a different layout, a significantly postponed completion date or a different price from the one agreed.
• The reservation is cancelled by agreement and both parties agree in writing to a refund.

If a refund rests only on a verbal promise from the salesperson, do not count on it. What matters is what is written and signed.

When the fee is forfeited

The fee is typically forfeited when the buyer ends the reservation by their own decision and the contract provides for forfeiture in that case. The most common situations:

• You change your mind about the purchase without a reason stated in the contract.
• You miss the deadline for signing the contract for a future purchase agreement or for paying the first deposit.
• You do not provide proof of financing within the period set by the contract, even if the mortgage is approved later.
• You breach other conditions of the reservation, for example by not submitting the required documents.

Watch the deadlines. A short period for arranging a mortgage is a common reason why the fee is forfeited, even when the buyer genuinely wanted to buy.

What to focus on in the reservation contract

Before signing, go through the contract and have any unclear points explained. For larger amounts it is sensible to have a lawyer check it. Check the following points:

Point	What to ask
Description of the payment	Is it a reservation fee, a deposit towards the purchase price, or a contractual penalty?
Credit towards the price	Is the payment deducted from the purchase price, or is it on top?
Reservation period	Until when is the unit reserved, and can the period be extended?
Grounds for a refund	Are they stated specifically, including a refused mortgage?
Grounds for forfeiture	In what circumstances is the money forfeited, and in what amount?
Refund deadline	Within how many days will the developer return the money, and to where?
Price and parameters	Are the price and layout of the unit stated firmly in the reservation?

It is also worth finding out where the payment goes. It is safer to pay to the developer's account stated in the contract or, for larger amounts, possibly into escrow. The escrow agent holds the money until the conditions are met, which reduces the risk of a dispute.

How to prepare so that the fee is not forfeited

Most problems can be avoided by preparing before the reservation:

1. Clarify your financing. Talk to a mortgage specialist, check what amount you can borrow, and work out the approximate repayments in our calculator.
2. Choose the project carefully. Compare offers in the project catalogue, look at the locations and the developers, their track record and completed buildings.
3. Negotiate the terms in advance. Ask whether a refund on refusal of a mortgage can be added and the deadlines extended. Have any additions written into the contract.
4. Do not pay under pressure. The argument that there is interest in the flat and you must decide at once is not a reason to sign a contract you have not read.
5. Keep your documents. The payment confirmation, the contract, your communication with the salesperson and the documents from the bank.

You can find the general buying process, from choosing to handover, in the buying guide. If you are not yet sure which project suits your requirements, you can use the housing inquiry form.

Frequently asked questions

Is a reservation fee the same as a deposit?

Not always. A deposit is usually credited towards the purchase price, whereas a reservation fee may be a separate payment that is not credited to the price. It depends on how the payment is named and regulated in the contract. If it is unclear, ask for written confirmation.

Will the developer refund the fee if my bank refuses my mortgage?

It depends on the contract. Some developers state this expressly, others do not. Settle this condition before signing and do not rely on verbal assurances. Discuss the details with a mortgage specialist or a lawyer.

What should I do if the developer does not refund the fee even though they should?

First, ask them in writing to refund it, citing the specific provision of the contract, and set a reasonable deadline. If they do not respond, contact a lawyer, who will assess the contract and the next steps. Keep all communication and proof of payment.