Subject to…

‘subject to…’, but does that mean subject to anything?

More conditions = vendor less likely to go for it, but temper that with a cash offer usually goes a long way – finance is apparently the reason most deals fall over, not due diligence clauses.

talk to your lawyer before submitting offers for exact wording of clauses and advice.

cheers-
mini

It’s a conditional *offer* that has a period of time for the purchaser to undertake the due diligence. If you get your builder’s report back and it’s stuffed, you can pull out.
because your conditions weren’t met.
Elysium, it’s not ‘uncertain’, that’s why contracts and lawyers are involved!!

I think it’s called the cooling off period in Aus but having never bought property in Aus I am not sure.

So let’s say you have ten days to do your checks (or decide not to bother) and all is OK, then you go unconditional on your purchase and at that point your deposit is due and you have an obligation to purchase the property.

Elysium are you being ironic or obtuse or have you seriously never heard of people making offers subject to certain things being checked out OK?

I have never made an offer *without* conditions.
I have also never had an offer rejected due to the conditions.

the vendor can always counter offer with less conditions, or add their own conditions i.e. if they get a better offer without conditions, they can pull out. But then there’s no point in having a contract.

Hi guys,

Sorry I’ve been away for a long time – work’s been really busy.

I admit I was being a bit flippant with my earlier post.

The point I’m trying to make is that without clear drafting, the effect of the “subject to” clause may be to postpone the existence of a binding contract until the “subject to” condition is satisfied. This means that either party can walk away from the sale before the condition is satisfied.

On the other hand (which is often the case), the effect will be that the contract is intended to be binding on the parties, and that the obligation to settle on the property is postponed until after the condition is fulfilled.

But why take chances with sloppy drafting?

Just a bit more effort will make things clear in your contract. For example, state in the contract that settlement is subject to the condition being fulfilled, and that if the condition is not fulfilled before a certain date, then either party (or just you) can terminate the contract have the deposit refunded.

Also make it clear that settlement is x days after the last condition is fulfilled. Don’t make the calculation of the settlement date indpendent of the fulfilment of the condition. For example, if you want the contract to be subject to finance approval and a building report being done, then say that settlement will be 30 days after both finance approval and a satisfactory building report are obtained.

Mini – you’re probably too experienced and clever to ever allow yourself to sign a contract where you get stuck in a corner, but I’m simply trying to say that there is a risk of things coming undone if the conditions in the contract are not clearly drafted.

And you say that’s why lawyers are involved. I don’t know about New Zealand, but how many people actually go to a lawyer to get the terms of their contract written up in Australia? Most terms are written by your helpful real estate agent, but how many of them are lawyers or have proper legal training (I realise that this question could be controversial, but it’s a statement of fact).

Cheers
Elysium-M

DIY Residential Property Settlements in WA – the book coming soon! When I can get my act together…

Elysium, all contracts in Canberra are drawn up by the solicitors. The agents merely send out a ‘sales instruction’ to the vendor’s solicitor, and things go from there.

Cheers
Mel

hi all,

If I put in a clause “Subject to finance approval” and later decide not to pursue the purchase despite the fact that there is no problem with my finance. If such clause is to be used, will it be followed up for verfication for its validity ?

Cheers,

CT

Hi Guys,
In QLD, 95% of the time the Real Estate Agent draws up the contract to have people sign. While some of them are good, there are far too many contracts being stuffed up from the outset. My strongest possible recommendation in purchasing property is to have your solicitor review the contract before signing anything. Find a good solicitor with a flat fee price (eg: drive away no more to pay [] )and ask for their help. If your solicitor keeps adding to your bill for things like reviewing the contract… find another solicitor.

A lot of the properties investors like ourselves are looking at are pre-loved properties with good returns. One clause that is very usefull when buying a property with obvious extensions like garden sheds, add on drive ways, kids cubby houses etc etc is this:-
‘This contract is subject to and conditional upon Final Certificates having issued from the local council for all improvements on the property’ Just to make sure everything is council approved. Could save you heaps of money down the road if you are considering selling.

Cheers
Shaun

I recently had a contract for a block of land I was selling InQLD.

The contract was being fought out by three people. All came in at one rpice then the prices varied as each knew others were interested. One went to 6 k above asking price.

I settled on one, not the highest. They wanted a longer contract. Most contracts are:

subject to pest and building reports
subject to: finance

Some add in subject to all searches and certificates (as someone stated)

Some add in subject to partner approval. (this was on the contract they gave me to consider – and a date)

I have added clauses eg subject to “bricks” Fences” being fixed or built with certain colours.

buyer or seller doesnt have to accept your conditions

warning, subject to finance…I always put through my bank (names) because you can also leave yourself wide open, they maybe able to find you finance…..LOL at a higher amount.

oh adn soil tests!!! conditions.

SO, anythig goes really, but they dont need to accept. alwasy plenty of people to buy, or another porperty to catch….if not you can go back for second nibble, maybe for a cheaper price.

You can lose good deals this way too.

Elves

CTL

As Elves said, they may find you Finance or provide finance, then you’d be stuck !! adding in subject to finance, just so you have an ‘out’ if you change your mind is not the way to go..

Apply for deals you only seriously want and add..subject to ( conditions as above ) which can give you an ‘out’ if the property condition etc is not as stated by the owner or problems become evident..

REDWING

“Money is a currency, like electricity and it requires momentum to make it Effective”