Subject to Finance

The most commonly used standard form of the contract includes a subject to finance condition, provided certain details in the items schedule are completed. Here’s a breakdown:

Key Provisions

• Conditional Approval: The contract hinges on the buyer securing finance approval from a financier listed in the items schedule, for an amount specified in the items schedule, and on terms satisfactory to the buyer. The buyer must take all reasonable steps to obtain this approval.
• Notice Requirement: If the buyer does not notify that finance approval hasn’t been obtained by the finance date and the contract remains terminated, or alternatively, that the finance condition has been satisfied or waived, the seller can terminate the contract at any time until the buyer gives notice that the condition is satisfied or waived.

Typical Completion

The items schedule is often completed with the finance amount listed as “sufficient to complete” and the financier as “buyer’s choice” or similar. The finance date is usually set between 14-21 days after the contract date.

Genuine Termination Concerns

Sellers might doubt the genuineness of a buyer who terminates the contract for not obtaining finance by the finance date. They may suspect that the buyer is using the finance clause to back out of the deal and might question if the buyer truly complied with the finance condition, particularly whether they took all reasonable steps to secure finance.