We were in the process of purchasing our 3rd IP with settlement on the 17th of December subject to finance (valuations)Our values on our current 2 IP’s came under our expectation by $25000 which meant our finance fell through. We let the REA know who let the vendor know and understandably the vendor was not impressed and who in turn maybe seeking legal advice on this matter.
Does the vendor have any legal rights in this circumstance ? Subject to finance should be as it reads shouldn’t it ?
Also what will happen to our initial deposit – could we lose it ?Any advice would be much appreciated on this matter.
regards,
BronnyHi Bronny,
I think the vendor doesn’t have any legal right in this case. He/she has to give you back the deposit. That is what the subject to finance for.
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]Huey
Hi Bronny
When you signed the contract did it give you a date by which you needed to say whether you had finance approved or not. I suggest you look at your contract first. If you are now over your time you may lose your deposit, but dont give up on finance seek out other banks and financiers to try and get finance, everyone seems to have to go thru this before they get their finance in order.
Seek solutions and you may just find them
Erikabronny, I didn’t know *settlement* had “subject to” clauses. I thought the business of purchasing- gaining finance, getting valuations, BPI’s etc- were what the cooling off period were for. I thought once the cooling off period was over, there was no more “subject to” outs from the contract. Anyone know if I am wrong in these thoughts?
kay henry
I don’t know about southern states but in the standard Qld contract the purchaser has about 2 weeks to go unconditional on the loan and up to this date may pull out subject to being unable to get finance or not liking the building and pest inspection reports. If the purchaser pulls out before the contract goes unconditional they get 100% of their deposit back. If the purchase falls over post unconditional but prior to settlement then the parties need to negotiate but yes often the purchaser loses their deposit.
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Mel
[email protected]Hi
Was it subject to finance by a specific institution and a particular interest rate
or was it subject to finance/at market rates
alf
Hi kay henry
I am from Victoria, so it may be different elsewhere.
I alway put all my offers through with a 3 week finance clause. Three weeks is usually enough to get a yes or no. The cooling off period is inadequate to do that.
Depending on what sort of offer form the agent uses, many have an automatic clause there, the agent just fills in the details ie the date and amount of finance.
Other contracts you need to write your own clause in under special conditions.
I ALWAYS put this clause in, because it gives me an out if I need it. The cooling off period is nice, but it isn’t always enough time to get inspections completed either.Keep smiling
Felicityeah, Felicity, I see what you mean. But I am referring to the date of settlement- Bronny needs to settle in 4 days- as in complete the entire transaction. I can’t see any vendor in the world allowing “subject to’s” right up until the due date for completion!
How long was your settlement period, Bronny?
kay henry
Hello All
Depending on the vendor you need to be very carefull when writing subject to finance. If that is all you have written and you get knocked back before settlement is due I think the vendor has the right to make you continue looking for finance with other lending companies until the due date. It is better to write subject to finance from “bank Name” at “branch”. This way if you are knocked back for finance from this bank you can either legaly pull out of the deal or just continue trying to get finance from other banks. If in doubt speak to a lawer. On the other issue if you just decide to pull out of the deal you lose your deposit, If your finance is rejected you should get your deposit back.
Scott
“Together we combine our strengths and eliminate our weaknesses”
this is how it goes ….
once you have exchanged contracts you have a deal. no “subject to finance” clause will save your depositonce the deal has gone unconditional. The vendor is entitled to keep it. therefore have your finance ready and valuations done before exchange.
even the words “subject to finance” leave you open. I am sure that you could find finance at 25% interest if you asked. finance is always available at a price!
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