iRealtee OS Glossary

Reservation Agreement

A Reservation Agreement in the Philippines typically includes:

Reservation Agreement

Reservation Agreement is a preliminary contract in Philippine real estate transactions that secures a property for a prospective buyer while parties finalize financing, documentation, and due diligence requirements. It establishes the buyer's intent to purchase and typically includes standardized terms and conditions, including Maceda Law notices as required by DHSUD guidelines.

Core Features

A Reservation Agreement in the Philippines typically includes:

  • Party identification — Complete details of the developer/seller and prospective buyer
  • Property description — Unit specifications, location, floor area in square meters (sqm), and parking slots if applicable
  • Reservation fee — Non-refundable payment (typically PHP 10,000–50,000) that secures the unit
  • Validity period — Timeframe (usually 30 days) for the buyer to complete requirements
  • Total Contract Price — The full purchase price in Philippine Pesos (PHP)
  • Payment scheme — Breakdown of equity, down payment, and financing options
  • Terms and conditions — Standardized clauses including Maceda Law disclosures
  • Cancellation provisions — Conditions for forfeiture or refund of the reservation fee

Use Cases

The Reservation Agreement is commonly used in:

  • Pre-selling transactions — Securing condominium units or subdivision lots before construction completion
  • Spot cash or deferred payment purchases — Locking in prices for ready-for-occupancy units
  • Developer sales — Primary market transactions where standardized contracts are mandatory
  • Secondary market sales — Private transactions where sellers may adopt similar documentation

Integration

You can use a Reservation Agreement as the foundation for your property purchase workflow. After signing, the agreement typically transitions to a Contract-to-Sell once the buyer completes documentary requirements and initial equity payments.

Real estate management platforms streamline this process through:

The Reservation Agreement in the Philippines operates under several regulatory requirements:

Presidential Decree No. 957 — The Subdivision and Condominium Buyers' Protective Decree mandates transparent disclosure of sale terms and prohibits deceptive practices. Developers must hold a valid License to Sell (LTS) before accepting reservations.

Republic Act No. 6552 (Maceda Law) — While reservation fees are typically non-refundable, buyers gain protection once payments qualify as installments under the Maceda Law. The agreement must include notices informing buyers of their rights under this statute.

DHSUD Guidelines — The Department of Human Settlements and Urban Development issues circulars requiring developers to use standardized contract forms with specific buyer protection disclosures.

Refund Conditions

Reservation fees are generally non-refundable, but buyers may recover payments when:

  • Developer misrepresentation — False claims or concealed material facts about the property
  • License to Sell violations — Developer lacks proper DHSUD registration or LTS
  • Contractual contingencies — Buyer's loan application is denied (if stipulated in the agreement)
  • Developer default — Failure to deliver the property as promised

References

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