Sale fell through buyer unable to get finance

[warek]

Hi there

I have a friend who sold his house subject to finance, and has bought another one subject to his sale. He has had 3 formal requests from buyers solicitors asking for an extension of time to arrange finance and after the 4th request he has declined.

Naturally his pending purchase will now fall through. Is there any part of the deposit he can keep or any compensation?

He is in Victoria

Thanks
Kevin

 

[Aaron_C]

Well if they withdrew under a finance clause then they should get all their deposit back.

 

[Peter_Tersteeg]

Can they shed any light on why finance has been delayed? Admittedly 4 extensions is very extreme but I have had one or two cases where this has occurred and finance was eventually obtained.

If they exit the contract under the finance clause they're entitled to have the deposit returned.

 

[Jamie M]

As PT said - there might be a good reason behind the extensions. Are they able/willing to shed some light on why it's taking so long?

At times, it can be due to lenders service times blowing out - and after a long w/end, that's not uncommon.

Having said that, four requests is quite a lot - unless they're only asking for an extra day or two each time.

Cheers

Jamie

 

[Peter_Tersteeg]

There may be a way to put the property back on the market where they can still purchase the property if their finance comes through, but if you can give them 24 hours to go unconditional if you get another offer.

Probably the best thing to do however would be to simply put it back on the market and start again. If they want to make another unconditional offer, they're welcome to.

 

[bcole2012]

Yep if they pulled out under the finance clause they are entitled to their deposit back in full. Your friend should just relist the property and start again. It's a bugger that they're going to miss out on the property they want to purchase but maybe some negotiations with the vendor there may help?

 

[neK]

Just curious, is this "subject to finance" clause something standard across other states? I never seen one in NSW. Much like the subject to pest / building report.... I haven't heard of one being accepted.

I was always under the impression that attempting to add a "subject to finance / building / pest" clause results in the offer being ignored (unless its stupidly high) as it holds no value for the vendor.

I know if i was selling and someone offered me more but included "subject to ...." clauses, I would go for the offer that didn't include such clauses.

 

[Ed Barton]

Just curious, is this "subject to finance" clause something standard across other states? I never seen one in NSW. Much like the subject to pest / building report.... I haven't heard of one being accepted.

I was always under the impression that attempting to add a "subject to finance / building / pest" clause results in the offer being ignored (unless its stupidly high) as it holds no value for the vendor.

I know if i was selling and someone offered me more but included "subject to ...." clauses, I would go for the offer that didn't include such clauses.

Can't comment about other states but for QLD finance and building/pest clauses are pretty standard and expected.

 

[Aaron_C]

Finance clauses are common in Victoria, Queensland etc and are pretty much standard practice in places like WA.

 

[Peter_Tersteeg]

Just curious, is this "subject to finance" clause something standard across other states? I never seen one in NSW. Much like the subject to pest / building report.... I haven't heard of one being accepted.

I was always under the impression that attempting to add a "subject to finance / building / pest" clause results in the offer being ignored (unless its stupidly high) as it holds no value for the vendor.

I know if i was selling and someone offered me more but included "subject to ...." clauses, I would go for the offer that didn't include such clauses.

NSW has a different process where contracts aren't signed (or exchanged) until everything else is in place. In most cases there are no special clauses or conditions.

I suspect this could lead to gazumping quite a bit as it appears that the period between agreeing on a price and exchange is essentially a handshake. There may be other protections I'm not aware of because I haven't actually seen this behavior occur very often.

 

[Jamie M]

In the ACT it's common to not sign the contract until building/pest inspections have been carried out and finance approved.

In NSW -the same often applies, but in some markets, they will insist on cooling off periods which allow a certain amount of time for getting everything in order. Some are only 5 days which are always fun.

Cheers

Jamie

 

[Scott No Mates]

Just curious, is this "subject to finance" clause something standard across other states? I never seen one in NSW. Much like the subject to pest / building report.... I haven't heard of one being accepted.

It is very dependent upon the market, vendor and agent as to what is acceptable. By keeping the pressure on the purchaser to get their ducks lined up then sign a S66w the buyer runs the risk of losing the property if they are too slow but the vendor hasn't taken the property off the market.