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Buying property “subject to finance”
19 Mar 2019

If you intend to borrow money from a bank or lending institution prior to purchasing a property, it may be advisable to make the contract of sale “subject to finance clause Vic”. This will allow you to rescind the contract of sale and recover your fill deposit in circumstances where you are unable to obtain finance.

It is a wise move to sign the contract “subject to finance” as there is always a doubt about the purchaser’s capacity to borrow money or whether the valuation of the property meets market standards. The subject to finance clause Vic specifies that the contract is conditional, or “subject”, to the purchaser being able to borrow money from the bank.

General Condition 14 of the pro forma contract of sale details the subject to finance clause. Below are the particulars and terms of the subject to finance clause:

If the subject to finance clause Vic is not included in the contract of sale, and the purchaser is unable to borrow money from the bank, they face the risk of losing their deposit. If the finance is not approved, the clause sets out the procedure by which the purchaser can end the contract of sale.

Terms of the subject to finance clause

Standard practice is to put a seven (7), fourteen (14) or twenty one(21) day subject to finance period from the date of signing of the contract of sale. Further finance extensions can be requested if there are delays in obtaining the finance approval. If the vendor is not agreeable to any extension the contract of sale can either be terminated or the purchaser can decide to proceed unconditionally without securing the finance.

In terminating the contract of sale the purchaser must use their best endeavours to obtain the finance. They should be able to show that made a genuine attempt to obtain finance with a formal decline letter from the lending institution.

If the finance has been declined the purchaser’s conveyancer, or lawyer, should write to the vendor’s conveyancer, or lawyer, notifying them the finance has not been approved and requesting a full deposit refund.

When can the subject to finance clause be used?

The “subject to finance” clause is only applicable to private sales and not public auctions. In both instances you should have pre-approval already in place. A pre-approval is an indication that you can borrow funds from the bank subject to certain conditions. Once these conditions are met the bank or lender will issue an unconditional finance approval.

Pre-approvals are subject to valuation and in most cases the lender will perform a valuation of the property to find out its current market value before agreeing to lend

Once you have got your unconditional finance approval your lender will send you loan or mortgage documents to sign and return. You will need to sign the documents and get them back to the bank as soon as possible as lenders need time to certify these documents and be in a position to proceed with settlement.

The risks of using a finance clause

Purchasers on occasion assume that the subject to finance automatically entitled them to end the contract of sale and have the deposit refunded in full. However, there is a procedure that needs to be followed and the purchaser must take the necessary steps outlined in general condition 14.

If the purchaser has not made attempts to obtain the loan or contacted the vendor of their position, the contract may automatically become unconditional the purchaser may have a risk losing their deposit or expose themselves to being sued.

If the subject of the finance clause lapses and the contract becomes unconditional, the purchaser has no option but to proceed with the purchase. If the purchase does not settle, the purchaser will lose their deposit and may be sued by the vendor for damages for breach of contract and be liable for any additional costs incurred by the vendor.

Why you should engage a qualified property lawyer?

Before signing the contract of sale, it is very important that you confirm whether the purchase is in fact “subject to finance”. This will ensure that you are protected from any risks associated with obtaining the finance.

It is also important that the particulars of sale, the general condition and the special conditions are properly reviewed. The purchase should make sure they understand the contents of the documents before making a decision to proceed with the purchase.

Incorrect legal advice or relying a real estate agent, who does not have the purchaser’s interest at heart, may expose the purchaser to significant financial loss. As a purchaser, it is important that you realise that relying on the real estate agent can be very risky, when in fact the real estate agent doesn’t act for you.  

In conclusion, the subject to finance clause Vic can be an important protection for the purchaser. To utilise this clause and for further information on property law do not hesitate to contact us on 8590 8370.

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Alfred Tsang
Alfred Tsang
12:44 05 Jun 20
Celal has been a great supporting presence during our first home purchase. My partner and I had used Haitch Legal for... contract reviews and conveyancing needs during settlement of our home purchase. Despite having a million questions Celal was always happy to answer them and guided us through the process. Everything was made simple for us to understand which gave us the right confidence to successfully purchase and settle our first home!read more
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Guner Hussein
13:04 27 May 20
Halil is a long time colleague of mine and I can testify to his professionalism and quality service. He is a smooth... operator who takes the guesswork out of your purchase or sale of property.read more
Becky Bolu
Becky Bolu
03:24 10 May 20
I have engaged Haitch Conveyancing based on their 5 star reviews and their quick response and transparent... pricing.Celal and Halil reviewed couple of contracts for me and always pointed out important matters and provided change feedback in timely and consistent manner. When I found the one, Celal has reviewed the contract very promptly and kept me updated with all the progress during settlement period. Everything was calculated correctly and he ensured all involved parties and agencies are also informed. I cant thank enough to Celal and Halil for their service and making this home buying process as easy as.I strongly recommend Haitch Conveyancing to anyone in Victoria, Australia for all property matters.read more
Liz Sutherland
Liz Sutherland
23:41 01 May 20
I utilised Haitch Conveyancing for my first property purchase and they were nothing short of brilliant. They were... thorough, prompt, always had time for me, and explained things in ways I easily understood. The whole team were amazing. I'd recommend them to anyone looking for conveyancing services in Melbourne, I wouldn't go with anyone else.read more
Henry Rosel
Henry Rosel
20:10 10 Mar 20
Halil and team were nothing short of amazing! Answering queries within hours and having everything settled on time and... without hiccup.Will be using Haitch for all future settlements. Thanks again.read more
Aloka Moghe
Aloka Moghe
00:56 07 Mar 20
We knew very little about conveyancing process but Halil explained the process in detail to us and made the process... painless. Katarina was excellent with communication keeping us up to date as it progressed.Would highly recommend Haitch Conveyancing.read more
Ali Han Yenisehirlioglu
Ali Han Yenisehirlioglu
03:10 03 Mar 20
Haitch Conveyancing has provided legal services for us for a property settlement in Melbourne. Their service was very... personalized, on - time and flawless. I was able to reach them whenever i had questions and each time they took their time to explain all the relevant details to me. I would never work with any other law office for conveyancing ever again. I recommend Haitch to every Victorian.read more
Bob Airlie
Bob Airlie
02:32 27 Feb 20
The team was fantastic, easy to deal with, everything was done electronically and via email. Can call at any time and... receive an answer to your questions.read more
KrisDavid DayClarke
KrisDavid DayClarke
08:14 26 Feb 20
The Team at Haitch Conveyancing took care of conveyancing in a friendly and efficient manner.
Maajed Durrani
Maajed Durrani
02:39 04 Feb 20
Halil & Katarina have assisted me with my property purchase. They are efficient & easily approachable. Replies to... email are very prompt. Highly recommended for their services.read more
Le Bui
Le Bui
10:40 10 Dec 19
Friendly, helpful and experienced team who is very approachable and supportive. Thank you for helping through with my... first home purchase!read more
Yun Bai
Yun Bai
00:14 10 Dec 19
The service was friendly and professionally. Highly recommended.
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Aisar Khoder
23:50 05 Dec 19
Halil assisted me with my property sale. He is very approachable and efficient with his work. Very highly recommended... and fairly priced.read more
Grant Taylor
Grant Taylor
10:04 26 Nov 19
Efficient team. They made our conveyancing process very easy
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Simon Bosma
04:07 08 Aug 19
Halil helped us with the conveyancing for the recent purchase of our first home. A potentially stressful process was... made very simple, always picks up the phone and quickly responds to emails and a very reasonable fee. Highly recommended and would work with again.read more
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Mursel Duz
03:07 05 Aug 19
Haitch Conveyancing act on my behalf as vendor. There were 2 townhouses both has settled on time perfectly. even though... there were some issues with the purchaser's bank etc. But Halil made it happened and both settled smoothly. Great service and highly recommended.read more
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Reuben van Bemmel
10:03 22 Jul 19
Halil has been immensely patient and helpful.
Stephanie Braham
Stephanie Braham
09:40 19 Jul 19
Haitch Legal did an excellent job taking care of our property purchase settlement. They made the whole process seem... seamless. Halil and Katarina were always patient and accessible and willing to answer any question I had. Very reasonably priced too. Will use again.read more
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Yasin Ilanbey
08:39 21 May 19
5 stars for Halil Gokler and his professional team of lawyers/conveyances.
clean connection
clean connection
03:02 01 May 19
Halil & Katarina are approachable with queries. We use them for all our business dealings. Would highly recommend to... all !!!read more
Joie Goman
Joie Goman
02:51 25 Apr 19
Highly recommended! Halil assisted us through our conveyancing and always replied to our emails and questions... promptly. His fees are also very reasonable and explained the conveyancing process to us. Halil and his team are very friendly and professional. We would use his service again.read more
Laura McMenamin
Laura McMenamin
03:59 14 Mar 19
Halil and Katerina were brilliant. Very responsive and patient with all our questions. Highly recommend.
samiamansourSM
samiamansourSM
11:04 08 Mar 19
Excellent service with very cordial staff . Thank you for your support and assistance.
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Sam Watkins
05:59 20 Dec 18
Halil and Katrina of Haitch Conveyancing assisted us in buying our family home. They were friendly and helpful, and did... great work. We are very happy to recommend them.read more
Varun R
Varun R
04:56 10 Dec 18
Getting Halil Gokler to assist with our property purchase was the best decision we made. Halil's service and... professionalism went above and beyond his fixed quote for services. It paid off having a qualified lawyer provide this service as, when the conveyancers on the other side were incompetent and didn't settle on time, Halil was on hand with pragmatic advice to help us achieve a good outcome.read more
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04:24 28 Nov 18
We use Halil and refer our clients to him. We get good feedback. Great service with prompt response times at a... reasonable price. Highly recommend Halil and his team at Haitch legal. Thank You Halil from Demir & Co Accountants.read more
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00:03 21 Nov 18
We can't recommend Halil enough. He was fantastic in helping us with our first home settlement. We were late acquiring... his services in the process but Halil's service went above and beyond to sort everything within a tight time frame and patiently explained everything to us when we had many many questions! Made what was a tricky situation completely effortless. Highly recommend him.read more
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