Why there must be both reservation and intent sales and purchase contract? Are there any differences between these? What if no sign up for reservation? Broadly questions continue. TerraBKK set out replies to those inquiries.

Reservation contract 

It is a new type of contract which has been applied by the real estate developer in order to replace “Intent Sales and Purchase contract” Typically a deposit will be paid when a buyer make a decision to buy a real estate, the seller issues a receipt of payment, then a designated date is set out to execute intent sales and purchase contract.

Intent Sales and Purchase contract 

This is usually a sales contract but it has been specific to transfer the ownership of land at a later date of execution. The Intent Sales and Purchase Contract were not defined by the law to be in form of paper only. Thus if the deposit was paid or partial payment was made these are eligible to a lawsuit such as no Intent Sales and Purchase was made but the buyer paid deposit and was delivered to the seller if the seller does not show up on a designated date of transfer ownership of land. In this situation even no contract made but deposit was paid, a seller is enforceable to transfer ownership of the land.

However, it is better to execute the contract in order to guard our rights. Having a proof in the process of court trial will earn more benefit.

The pros of reservation contract in terms of the developer. 

The seller usually prefers the buyer to execute the reservation contract due to the nature of business of the real estate development. Typically, the developer should first have purchased the land then making plan in order to obtain a permit from the relevant authorities. Upon receiving the permit, the developer shall then advertise and publicize the project for sale. During the time the plan of land should be first parcel out or merged. But some of the developer try to avoid this ruling because they want to make sales during the time that they have not yet buy the land or the land is exist but no permit obtain the authority so they avoid by applying reservation contract instead of executing intent sales and purchase contract.

Unless the developer is unable to launch the project, the only method the buyer capable to do is to reimburse money with interest but the seller cannot be enforced to transfer the ownership because no provision granted the seller to be covenanted in return.

The pros of the intent sales and purchase contract in terms of the buyer 

To protect the buyer against the seller from the unfair conditions. The government publishes the standard contract in order to control and comply with prescribed conditions such as, the condition to claim for damages in case either the buyer or the seller fails to perform the contract shall be treated equally. Or in case of a condominium sales and purchase contract, it should be transferred the ownership independently without selective fee collected by the project owner.

The buyer is bound to pay money under contract obligation. The seller’s covenant to transfer the ownership of either the condominium or a house. If the buyer fail to perform contract then the sell is entitle to terminate the contract and legally keeps deposit or down payment that was made before. On the contrary if the seller fails to perform the contract, the buyer shall file a lawsuit against the seller to enforce the transfer of ownership of either the condominium or a house.