Agent contracts and forms that bind you abroad

Most of the paperwork that binds a foreign buyer is signed before the real purchase contract: a form at the first viewing, an agreement with a buyer's agent, a reservation. Because these papers look like formalities and are often presented on the spot, they are the ones buyers read least. This article lists the typical documents, what they can commit you to and what to check before signing. It is general information, not legal advice; the wording of your contract and the law of the country decide, so have it read by a lawyer you chose.

The documents you meet before the main contract

• Viewing form or visit voucher. A paper you sign at a visit to show which agency introduced you to the property.
• Buyer-agent (search) agreement. A mandate under which an agent finds a property for you and you pay.
• Reservation or offer form. A proposal to buy at a price, often with money attached.
• Reservation agreement or preliminary contract. A first binding document with a deposit and a deadline to sign the main contract.

Viewing forms and visit vouchers

The purpose of a visit voucher is to prove who introduced the buyer to a property, so that the right agency gets the commission. In France this is the bon de visite. One legal note from 2008 describes a seller who gave a non-exclusive mandate to an agency with the fee at the buyer's charge, a couple who visited through that agency's voucher and then bought through another agency also instructed by the owner, and the first agency claiming its fee. It is an old and incomplete source and the rules may have changed, but it shows the kind of dispute these forms create: who introduced you, and who is owed what. Do not assume that a voucher binds you; do not assume it does not. Ask what it says about commission and exclusivity before you sign, and keep a copy.

Buyer-agent agreements and exclusivity

If you hire an agent to search, the agreement should say:

• what exactly you are buying (a given property, a type, a country) and for how long;
• whether it is exclusive, so that you cannot use another agent or buy through someone else;
• when the fee becomes due: on signing the contract, on completion, or merely because you bought something the agent had shown;
• whether the fee applies after the agreement ends if you buy a property that the agent introduced (a "tail" period);
• who else pays the agent, since a seller or developer may also pay.

In Dubai the regulator's forms separate the seller's broker (Form A), the buyer's broker (Form B) and the sale memorandum (Form F), according to several broker guides; the exclusivity terms of the buyer form were not confirmed, so ask for the form and read it. In France the law on agents requires, according to legal summaries, a written mandate that states the commission and who bears it, and the commission is due only after the sale is completed. Treat such summaries as a starting point and ask your lawyer to confirm.

Offer forms with money attached

In Italy, according to one summary, the buyer's written proposal is usually made on the agency's form and accompanied by a cheque for the caparra, made out to the seller and valid for a short stated period. If the seller accepts within that period, a binding obligation may arise. A form that looks like "just an offer" can be a commitment, so ask what happens when it is accepted, what the money is, and in whose name the cheque is drawn.

Reservation agreements, arras and deposits

The label on the paper is not what counts. In Spain, law-firm summaries distinguish several kinds of arras:

• Penitenciales. Either side can withdraw; if the buyer withdraws, the deposit is lost; if the seller withdraws, the seller returns double (Civil Code, article 1454 in the summaries).
• Confirmatorias. The deposit is a part payment and does not give a right to withdraw; the other party may sue for performance or damages.
• Penales. The deposit is lost on default, but the seller may still claim performance or damages.

The same summaries say the wording of the clauses decides, not the title, and that a paper called "reserva" can work like arras. They disagree on how a court reads a contract that is silent, so a buyer who wants a clean exit should have the contract say so in words. In Cyprus, one law firm advises that no funds be transferred without a written reservation agreement. For a bankrupt developer see deposit protection.

Checklist before you sign anything

• Do you have the full text, in a language you can read, before you pay or sign?
• Does it name the seller, the agent and the property, with the cadastral or registry reference?
• Is the deposit refundable, in what cases, and who must agree to return it?
• Where does the money go: a lawyer's or notary's client account, or an escrow, or the agent's or seller's own account? See wiring a large deposit.
• How long is the deadline to the main contract, and what happens if the seller's documents are late?
• Is there an exclusivity or tail clause, and does it apply to properties the agent did not show you?
• Which law and which courts apply?
• Has your own lawyer read it? See how to read a purchase contract.

A real reservation is also not a reason to skip checks. Make your signature conditional on title, planning and debt searches, as set out in pre-purchase checklist, and be careful with schemes described in property scams abroad.

FAQ

Can an agent make me sign on the spot? They can ask. You can say that you will return the signed paper after a lawyer has read it. A good agent will accept that.

Is a deposit receipt the same as a title? No. It records a payment and a promise. Only the registration of title secures ownership.

Can I cancel a buyer-agent agreement? That depends on its terms and the law. Read the termination and tail clauses first.

Does a "reservation" always take the property off the market? Only if the document says so, and only for the period stated.

Independent help on your side

Independent help on the buyer's side, such as a lawyer you instruct directly or an adviser who tells you in writing how they are paid, closes the structural gap. D.H. Realting can coordinate independent local lawyers for you; ask any adviser, us included, how they are paid. This text is informational only and is not legal, tax or investment advice.