Resale Reservation Deposits: How a Seller Can Avoid Blocking an Apartment for a Weak Offer

Prepared by the NovAsia Editorial Team

A reservation payment should turn a serious resale offer into a controlled route towards the main sale and purchase agreement. Too often it does the opposite. The seller removes the apartment from the market, the agent announces that it is sold, the buyer only then starts arranging finance, and several weeks later the buyer walks away and asks for every dollar back.

The weakness is rarely the amount alone. The parties usually failed to define:

• what the payment legally and commercially represents;
• whether a binding sale already exists;
• how long the property is restricted;
• what due diligence the buyer may conduct;
• which findings justify repayment;
• what amounts to buyer default;
• what amounts to seller default;
• when the principal sale agreement must be signed;
• who holds the funds;
• how the agent's commission is treated.

Cambodia's Civil Code includes a specific rule for an earnest-money deposit under Article 518. Broadly, before performance has begun, a buyer may withdraw by forfeiting the deposit and a seller may withdraw by returning twice the amount. That rule should not be assumed to apply automatically to every sum labelled a "reservation deposit".

A payment may instead be:

• a short holding fee;
• an earnest-money deposit;
• an advance;
• part of the purchase price;
• refundable security;
• money held by an independent stakeholder;
• a fee for a defined service.

Its consequences depend on the signed agreement, the Cambodian-language text, the facts and the stage of performance. A seller should choose the structure deliberately and have a Cambodian lawyer review it.

Decide why the seller is taking money

A reservation payment can perform several functions.

Evidence of seriousness

The buyer demonstrates that they are willing and able to move beyond an informal enquiry.

Compensation for exclusivity

The seller gives up some ability to accept another offer for a defined period.

Time for due diligence

The buyer receives access to title, condominium, tenancy and transaction documents.

Commitment to negotiate and sign the principal agreement

The commercial terms and timetable are fixed sufficiently to prevent the transaction from restarting from zero.

Credit against the purchase price

At completion the payment is applied to the price.

Agreed exit mechanism

The agreement states when the money is repaid, retained, doubled or replaced by a damages claim.

One payment may serve more than one purpose, but the agreement should distinguish them. A sentence such as "the buyer pays USD 5,000 to reserve the apartment" leaves the essential questions unanswered:

• Until what date is the apartment reserved?
• Has a binding sale already been formed?
• Is the amount refundable?
• For which reasons?
• Is it credited towards the price?
• Who may terminate?
• Do viewings stop?
• What documents has the buyer already received?
• What happens if the main agreement is not signed?

Five common structures

1. Short holding payment

This is usually suitable for a few days while identity checks, documents or the reservation text are finalised.

It needs:

• a brief fixed period;
• a clear repayment rule;
• no misleading suggestion that completion has already occurred;
• an identified holder of funds.

2. Earnest-money deposit

The parties may intend to engage Article 518 or agree comparable consequences. Because that provision has a distinctive legal effect and depends on the stage of performance, the wording should be reviewed locally.

Do not use the English word "deposit" or "earnest money" casually when the Khmer text describes something different.

3. Advance payment

This is part of the purchase price paid before completion. If the transaction fails, repayment and damages depend on the contract and applicable law rather than automatically on the earnest-money rule.

4. Non-refundable reservation fee

The payment is consideration for a defined service or period of exclusivity. Its fairness and enforceability may be questioned where the seller cannot transfer the apartment or failed to disclose a material issue.

5. Stakeholder-held funds

A third party holds the sum and releases it only when stated conditions are met.

A normal agency account should not be described as escrow unless there is a genuine, lawful and documented independent-holding arrangement.

The label does not settle the result

The agreement should state:

• the payment's legal and commercial nature;
• its purpose;
• whether it is credited to the price;
• who holds it;
• whether interest is earned;
• release conditions;
• repayment conditions;
• retention conditions;
• any agreed double repayment;
• damages;
• accounting and tax treatment;
• the governing language.

When the parties intend to rely on Article 518, counsel should confirm that the text and transaction stage support that intention. When they choose bespoke reservation rules, those rules should be expressed directly rather than left to assumption.

A reservation is not a substitute for the main sale agreement

A reservation agreement is shorter, but it still governs a high-risk interim period. It commonly fixes:

• the parties;
• the apartment;
• the price;
• the payment;
• major commercial terms;
• the due-diligence scope;
• deadlines;
• exclusivity;
• default;
• the route to the main sale and purchase agreement.

The principal agreement will usually contain fuller provisions on:

• title warranties;
• mortgage discharge;
• transfer tax and fees;
• cadastral registration;
• physical condition;
• tenancy;
• furniture and equipment;
• staged payments;
• possession and keys.

A vague reservation followed by months of negotiation creates restriction without certainty.

Check the buyer before accepting the money

At a minimum, establish:

• passport or company documents;
• the authorised signatory;
• the person or entity that will take title;
• citizenship and intended ownership route;
• proof of available funds;
• the status of any financing;
• the remitting bank account;
• the buyer's agent and lawyer;
• a credible timetable.

Avoid accepting an anonymous transfer from an agent with a promise that the buyer's identity will be provided later. Money from an unexplained third party complicates due diligence, repayment and bank compliance.

The checks should be proportionate and coordinated with the lawyers and banks involved. The objective is not to conduct an investigation beyond the transaction; it is to avoid granting valuable exclusivity to a person who is not ready or legally able to buy.

The seller also needs to be ready

Before demanding a meaningful non-refundable payment, the seller should be able to disclose or prepare:

• identity and authority;
• current title status;
• known encumbrances;
• any mortgage;
• the likely foreign-ownership route;
• condominium arrears;
• the tenancy position;
• registered and marketed areas;
• material defects;
• the basis of parking and furniture rights;
• the proposed completion mechanism.

A buyer should not be tied to a harsh deposit where the seller is concealing a title problem or has no workable mortgage-release plan.

The Civil Code's sale provisions require the seller to transfer the promised right and address third-party rights and security interests. A broad non-refundable clause should not shield a known undisclosed defect in title.

Identify every participant precisely

The agreement should distinguish:

• the registered seller;
• the proposed buyer;
• representatives;
• the payer;
• the agent;
• the holder of money.

Where the seller is a company, record:

• the exact legal entity;
• registration details;
• authorised signatory;
• corporate approval where required.

Apply the same discipline to a corporate buyer.

Where a power of attorney is used, confirm:

• its date;
• scope;
• the exact apartment;
• authority to sign;
• authority to receive or repay money.

An agent should not sign as seller or buyer without an effective power of attorney.

Describe the apartment without ambiguity

Include:

• legal and marketing project names;
• tower;
• floor;
• unit number;
• title number or status;
• registered area;
• contract or gross area where different;
• parking;
• storage;
• furniture and appliances.

"One-bedroom apartment in Tower A" is insufficient.

Attach a plan or another exact identifier. If the individual title has not yet been issued, describe the assignment or first-registration route and state who must cooperate.

For a foreign buyer, the legal floor and co-owned-building status matter. Marketing floor labels should not be treated as proof that the unit qualifies for foreign ownership.

Fix the purchase price and what it includes

State:

• total price;
• currency;
• transfer taxes and fees allocation;
• furniture and parking;
• credit for the reservation payment;
• payment stages;
• bank charges;
• any adjustment mechanism.

A discount agreed in messages should appear in the signed document.

If another currency is used, specify the exchange-rate source and calculation date. Before accepting the offer, the seller should calculate the expected net proceeds after mortgage repayment, commission, taxes, fees and any tenancy adjustments.

Choose the payment size according to the risk

There is no universal correct percentage. Relevant factors include:

• the exclusivity period;
• purchase price;
• number and breadth of buyer conditions;
• property liquidity;
• seller's carrying costs;
• mortgage position;
• time to the principal agreement;
• competing demand;
• financing risk.

A modest amount may be enough for a three-day document check. A larger amount may be justified for a 30-day full exclusivity period.

A large payment does not cure subjective repayment conditions or an unrealistic timetable. Do not select the amount merely because the agent describes it as standard.

State when the reservation becomes effective

It may take effect:

• on signature;
• when cleared funds are received;
• only when both occur.

Write this explicitly. A payment screenshot is not the same as cleared funds.

If the money arrives after the deadline, the agreement should say whether:

• the offer lapses;
• the listing remains active;
• a written extension is required.

Do not remove the apartment from the market before the monetary condition is met unless the seller has knowingly granted a free holding period.

Verify the receiving account

Potential recipients may include:

• the seller's bank account;
• an authorised law firm or independent stakeholder;
• a licensed agency account with express written authority;
• a bank-controlled account.

High-risk destinations include:

• an employee's personal account;
• an unrelated company;
• an electronic wallet;
• cash without a proper receipt.

The agreement should specify:

• beneficiary;
• bank;
• currency;
• account;
• payment reference;
• the holder's legal status;
• onward-transfer timing;
• repayment procedure.

Any change in bank details should be confirmed through an independently verified channel.

Limit the agent's authority

An agent may receive money only under direct written authority from the seller. The authority should cover:

• the specific apartment;
• amount;
• account;
• issue of a receipt;
• reporting;
• deadline for transfer to the seller or stakeholder;
• repayment;
• separation from commission.

Agency and mandate principles require proper care, accounting and transfer of money received for the principal, but the seller should still impose transaction-specific controls.

The agent's commission and the buyer's money should never be blended in one unexplained ledger.

Issue a proper receipt

The receipt should show:

• payer;
• buyer;
• seller;
• apartment;
• amount;
• currency;
• date;
• purpose;
• agreement reference;
• holder;
• bank transaction reference;
• repayment account where relevant.

"Received USD 5,000" is not enough. The receipt must be consistent with the reservation agreement.

Define the due-diligence period objectively

Set exact start and end times. The clock may begin only when the seller has delivered an agreed document package.

That package may include:

• title or contractual right;
• route to obtain a current registry search;
• seller identity and authority;
• mortgage information;
• condominium clearance;
• foreign quota evidence;
• lease and tenant deposit;
• draft principal agreement;
• furniture schedule.

If the seller delays the package, the agreement can extend the period by a stated formula.

Avoid an open-ended condition that allows the buyer to withdraw whenever they are "not satisfied". Due diligence should address defined legal, financial and physical risks rather than general preference.

Distinguish valid objections from a change of mind

Legitimate grounds may include:

• the seller is not the owner or lacks authority;
• the apartment description is materially wrong;
• an undisclosed mortgage has no workable discharge route;
• the proposed structure cannot register the buyer's right;
• substantial undisclosed condominium arrears;
• a material area discrepancy;
• a serious concealed physical defect;
• a sitting tenant prevents the promised vacant handover.

The following are normally commercial reconsiderations rather than title defects:

• disliking the wall colour;
• deciding on different furniture;
• finding a cheaper apartment;
• changing market expectations.

Where possible, use objective thresholds. A small outstanding service bill that the seller can pay before completion should not automatically unwind the reservation. A material and non-curable ownership problem should.

Require a documented objection process

A buyer's notice should be:

• written;
• delivered before the deadline;
• specific;
• supported by documents;
• accompanied by a proposed cure where appropriate.

The seller may then:

• cure the problem;
• dispute it;
• negotiate an adjustment;
• repay the money;
• proceed where the objection is invalid.

A statement that "the lawyer is uncomfortable" should not be enough unless the agreement expressly makes it enough.

Give the seller a cure period

Some issues are resolvable:

• updated registry information;
• spousal consent;
• a bank payoff letter;
• condominium confirmation;
• correction of a document.

The agreement should specify:

• number of cure days;
• buyer re-review;
• final deadline;
• treatment of the money.

A cure mechanism should not permit indefinite extension while the apartment remains blocked. A non-curable title or registration problem should trigger prompt repayment.

Control financing conditions

Where the buyer needs a loan, define:

• lender or loan type;
• application deadline;
• minimum amount;
• buyer equity;
• valuation requirement;
• approval deadline;
• evidence of a genuine application;
• evidence of rejection;
• extension rights;
• effect on the deposit.

Avoid "subject to financing acceptable to the buyer". That may allow withdrawal because the rate is merely less attractive than hoped.

A seller may reasonably request preliminary approval before granting exclusivity.

If the bank values the apartment below the price, the agreement should say whether:

• the buyer funds the difference;
• the price is renegotiated;
• the buyer may terminate;
• the payment is returned or retained.

The seller is not automatically obliged to reduce the price because of a lender's valuation.

Confirm the buyer's own funds

Even a financed purchaser needs money for:

• the reservation;
• equity contribution;
• taxes and completion costs.

Set a deadline for evidence of those funds. Failure may constitute buyer default after notice and an opportunity to cure.

It is better to discover a funding gap during the reservation period than after the main agreement has been negotiated.

Address foreign ownership explicitly

For a foreign purchaser, the reservation should identify:

• whether the unit itself is eligible;
• the legal floor;
• registered co-owned-building status;
• evidence of quota availability;
• the registration route;
• expected timing;
• responsible advisers;
• consequences if the route fails.

Cambodian law makes registration central to the transfer of ownership. A reservation payment does not itself create registered ownership.

If the foreign quota is not available, the agreement should state whether:

• the money is repaid;
• another lawful structure may be considered;
• time may be extended;
• the seller is free to accept another buyer.

A nominee structure should not be treated as an automatic alternative.

Deal with the seller's mortgage openly

Where the apartment is mortgaged, disclose:

• lender;
• approximate balance;
• location of the original title;
• payoff method;
• any direct payment to the bank.

A disclosed mortgage that can be discharged through an agreed closing mechanism should not by itself permit withdrawal. A concealed or non-releasable security interest should protect the buyer.

Set material condominium conditions

Relevant matters may include:

• service-charge arrears;
• special assessment;
• utilities administered by the building;
• access restrictions;
• parking;
• tenancy issues.

The seller may pay an ordinary arrear at completion. Do not make every minor bill an automatic refund event; use a threshold or cure period.

Clarify the tenancy position

Where the apartment is occupied, attach or disclose:

• the lease;
• rent and term;
• tenant deposit;
• whether the sale is with the lease or with vacant possession;
• viewing arrangements;
• notice requirements;
• target vacancy date.

A buyer cannot later describe the tenant as unexpected when the tenancy was properly disclosed.

If vacant possession is promised, make it a dated condition rather than an informal assurance.

Permit a controlled inspection

The buyer should usually inspect before reservation, but the agreement may allow one technical inspection. Define:

• access;
• prohibition on destructive testing;
• qualifications of the inspector;
• responsibility for damage;
• report deadline;
• what qualifies as a material defect;
• seller's cure rights;
• limits of an "as is" sale.

Do not allow drilling or dismantling merely because money has been paid. The seller should disclose known material defects.

Attach a preliminary contents schedule

Record:

• what is included;
• what is excluded;
• what belongs to the tenant;
• what the seller will remove;
• current condition.

"All furniture seen during the viewing" is too uncertain. Use dated photographs or a written schedule, and state whether a final inventory will be attached to the principal agreement.

Define exclusivity precisely

Several models are possible.

Full exclusivity

No advertising, viewings or new offers.

No second binding reservation

Marketing and viewings may continue, but the seller will not enter another binding commitment.

Backup marketing

The seller may collect backup offers.

Conditional exclusivity

Exclusivity ends automatically if the buyer misses identity, finance, document or payment deadlines.

The right structure depends on the strength of the offer. "Off market" is too vague unless its practical meaning is written.

For a conditional buyer, the agreement may permit:

• continued advertising;
• backup viewings;
• receipt of backup offers;
• no second binding sale;
• notice of a stronger backup offer;
• a short period for the buyer to remove conditions.

This reduces the risk of a weak proposal freezing the asset while avoiding double commitments.

Competing offers do not erase the agreement

Before accepting money, compare all proposals carefully. After valid exclusivity begins, a higher offer does not normally entitle the seller to ignore the signed reservation.

Article 518 may, in certain circumstances, permit a seller to withdraw by double repayment before performance begins, but its application should not be assumed. Even where legally possible, that course may damage reputation, create commission disputes and lose a credible buyer.

Define buyer default fairly

Possible buyer defaults include:

• failure to fund the reservation;
• false identity information;
• failure to show funds;
• failure to apply for financing;
• refusal to sign the agreed principal agreement;
• failure to make a required payment;
• insistence on an unlawful ownership structure;
• withdrawal after conditions have been waived;
• missed deadlines without a protected reason.

Consequences may include:

• retention of the payment;
• termination by the seller;
• renewed marketing;
• damages where lawfully agreed;
• separate treatment of agency commission.

A small delay should not automatically forfeit a major sum without notice and a short cure period.

Define seller default with equal care

Examples include:

• inability to establish authority;
• selling to another party during exclusivity;
• refusal to sign on the agreed commercial terms;
• failure to discharge a concealed mortgage;
• concealment of a known material defect;
• refusal to cooperate with registration;
• an unauthorised price increase;
• delivery of possession to another buyer.

Consequences may include:

• repayment;
• double repayment where expressly and lawfully agreed;
• documented buyer costs;
• damages;
• commission allocation.

A contract that strongly penalises the buyer but gives no meaningful consequence for seller default is commercially weak and more likely to produce conflict.

Put extensions in writing

An extension request should state:

• reason;
• completed due diligence;
• new date;
• treatment of the money;
• additional payment if any;
• exclusivity status;
• backup offers;
• new principal-agreement deadline.

The seller may grant a brief free extension, require more money, make a portion non-refundable, continue backup marketing or refuse. Repeated informal extensions through messaging apps allow a weak offer to consume an entire market cycle.

There should also be a final long-stop date after which the reservation ends. The fate of the money should depend on the cause of failure, not merely on the passage of time.

Move efficiently to the principal agreement

Set a timetable for:

• first draft;
• comments;
• revised draft;
• signature;
• next payment;
• incorporation of due-diligence results;
• resolution of outstanding matters.

The reservation should fix the commercial core firmly enough that the price does not reopen without reason, while allowing the principal agreement to contain detailed warranties, registration mechanics and completion protections.

The reservation payment must then appear once, and only once, in the final completion statement as credit towards the price where agreed.

Keep commission separate

The agency agreement should say when commission is earned:

• on reservation;
• on the main agreement;
• on completion.

It should also address buyer default, seller default, repayment and cooperation with another agent.

A seller should understand the consequence before accepting a refundable reservation that nevertheless triggers a full commission. The agent should not deduct commission from buyer funds before the agreed event occurs.

Do not give early possession

A reservation payment should not by itself give the buyer:

• keys;
• possession;
• authority to renovate;
• control of the tenant;
• the right to remove furniture;
• permission to register the address.

Where early access is genuinely needed, use a separate licence with insurance, supervision, a termination process and clear risk allocation. Early possession makes a failed transaction much harder to unwind.

The seller must preserve the apartment

After reservation, the seller should:

• maintain the property;
• disclose new damage;
• keep included items;
• maintain insurance and building compliance where applicable;
• avoid creating new encumbrances.

Dated photographs at reservation are useful. The buyer should not treat ordinary permitted occupation as seller default, but material new damage should be reported and dealt with.

Practical seller decision table

A weak offer may still justify a higher price, but the lock-up period should be shorter and backup marketing should continue.

Practical sequence

Before payment

• prepare seller documents;
• identify and screen the buyer;
• compare all offers;
• choose the payment structure;
• verify the receiving account.

At reservation

• identify parties, apartment and price;
• define payment and due diligence;
• define exclusivity and backup marketing;
• allocate default;
• fix the principal-agreement deadline.

During reservation

• deliver the document package;
• respond to objections;
• monitor financing;
• confirm foreign-ownership route;
• address mortgage and condominium issues;
• negotiate the principal agreement.

At the deadline

• sign the principal agreement;
• extend in writing;
• or terminate and repay or retain the money according to the agreement;
• restore unrestricted marketing.

Core principle

A seller should not accept a reservation merely for the comfort of saying that the apartment is sold.

A sound reservation buys a defined result:

• an identified buyer;
• paid and limited exclusivity;
• objective due diligence;
• credible funding;
• a fixed deadline for the main agreement;
• balanced consequences of default;
• controlled holding and repayment of money.

It should make lost market time meaningful to a buyer who is not serious, while preventing the seller from keeping money when the seller cannot transfer the promised right.

This article is for general information and does not replace Cambodian legal, tax, banking or agency advice. The classification and consequences of any payment depend on the signed agreement, the Khmer legal text and the facts of the transaction.

Sources

1. Kingdom of Cambodia, Civil Code, Article 518 on earnest money and Articles 531–559 on sale, transfer obligations, title and encumbrances, payment, insolvency risk and delivery. English translation prepared with JICA support. Accessed 19 July 2026.
2. Kingdom of Cambodia, Civil Code, Articles 637–646 on mandate, accounting and transfer of money and property received for a principal. English translation prepared with JICA support. Accessed 19 July 2026.
3. Kingdom of Cambodia, Law on Providing Foreigners with Ownership Rights in Private Units of Co-Owned Buildings, including eligible units and registration of transfers. Accessed 19 July 2026.
4. Cambodia Financial Intelligence Unit, customer-due-diligence guidance and official explanations on beneficial ownership relevant to regulated financial participants. Accessed 19 July 2026.
5. Non-Bank Financial Services Authority / Real Estate Business and Pawnshop Regulator, Sub-Decree No. 064 on licensing and supervision of real-estate agency and property-management services. Accessed 19 July 2026.

Frequently asked

Does every reservation payment automatically count as an earnest-money deposit?

No. Cambodia's Civil Code contains a rule for an earnest-money deposit, but a payment may instead be a holding fee, an advance or part of the price. Its legal effect depends on the agreement and the facts.

When should the seller take the apartment off the market?

After the reservation agreement is signed, the money has cleared, the buyer has been identified and firm deadlines are in place. Where the offer remains conditional, the agreement may expressly permit backup marketing.

May an agent receive the reservation money?

Only with written authority from the seller and clear rules on the receipt, bank account, onward transfer and repayment. The agent's commission and the buyer's money should be accounted for separately.

What should the seller do if the buyer asks to extend due diligence?

Any extension should be written and state the new deadline, any additional payment, the treatment of competing offers and whether any part of the money becomes non-refundable.