Contract Conditions – Finance Applications:

Conveyancing in Queensland can be a very complex process, as it is affected by at least 20 different pieces of legislation, extensive case law, detailed practice guidelines and stringent contract conditions. As a result it’s vital that you protect your interests during such an important transaction by having an experienced property lawyer on your side.

The conveyancing process is very deadline driven and there are strict penalties that apply if you are late meeting a deadline or miss it. One of these deadlines is the finance clause. In most cases when buying a property, you will require finance in the form of a mortgage from a lender.

When you sign a contract of sale for a property, it is standard for the finance clause to apply and you will usually receive 14 days to obtain finance approval. It’s extremely important that you keep your solicitor up to date with your finance application, as it’s their job to update the seller’s solicitor on the outcome of this. Failure to update their solicitor can have damaging consequences for your purchase. 

Under the standard REIQ Contract of Sale the finance condition in residential contracts states the buyer is to give notice to the seller by 5pm on the due date that:

  1. finance was approved and the condition is satisfied; or
  2. finance approval has not been obtained; or
  3. an extension to the finance date is required; or
  4. the finance condition is to be waived.

As a buyer it is your responsibility to ensure the seller, or their solicitor, is advised of one of these things by the due date.

If you a taking our finance for your purchase of a property in Brisbane, or on the Gold Coast it is important you have your conveyancing lawyer inform all parties of its approval.

If you or your solicitor fail to provide this advice to the seller, or their solicitor by 5pm on the due date, then this provides the seller with the right to terminate the contract for your default and as a result they are entitled to keep the deposit you made on the property.

This is obviously a very serious outcome for a buyer as it means you could face a serious financial penalty, as well as losing the right to purchase the property.

Failure to notify the seller of the outcome of your finance application does not automatically terminate the contract, and you can still at a later date inform the seller, or their solicitor that you have or have not received finance approval. However this is only the case where the seller has not first exercised their right to terminate the contract. 

This is why we termed this article ‘first in best dressed’. When the deadline is missed it’s all about who makes the next move, which is a very risky proposition. After all, why risk losing your deposit when all you need to do is ask for an extension on finance if it is not approved yet. In most cases the seller will not have a problem with granting this extension.

When it doubt it’s always best to keep the channels of communication open. If the seller is not willing to offer an extension on finance and you have not received finance approval, rather than risk losing your deposit, which can be a large sum of money, it’s often more sensible to terminate the contract under the finance clause.

Terminating under this clause is permitted under the contract conditions and if you do so you will receive your full deposit back.

If you do receive finance approval ensure that you notify the seller, or their solicitor of this prior to the deadline. Once you receive this approval the contract will become unconditional in most cases.

If you are considering purchasing a property in on the Gold Coast, or in Brisbane let our experienced property lawyers manage your conveyancingContact us on 1300 36 32 10, or email