Subject to Finance Clauses

Many contracts include a subject to finance clause.

What does this mean and as a purchaser what must you do and when? 

Details of the loan are set out in the particulars of sale page of the contract of sale, and you must ensure that you can adhere to them, as you are bound by the terms and conditions set out in the contract. 

The terms of a finance clause are that:

1. a loan must be applied for immediately;
2. you must do everything reasonable to obtain loan approval;
3. if you are unable to secure finance, you must serve written notice ending the contract together with evidence of rejection or non-approval of the loan from your lender to the vendor and/or its legal representative within 2 clear business days from your approval date; and
4. you must not be in default of any other terms of the contract of sale.

Subject to finance clauses do not give a purchaser the right to change their mind or pursue other finance options.

Failure to comply with your obligations could result in you not being able to rely on the subject to finance clause, a loss of the deposit and a possible claim for damages by the vendor.