Subject to finance clause

Question on behalf of a friend.

A friend of mine is selling there PPR. Buyer offers $X and signs it to subject to finance. On the day of the clause due to end the buyer pays a deposit of $59,000. Couple days later he is asking for an extension for finance, by now the clause has expired.

If my friend says no to the finance does the buyer lose his deposit? The solicitor is saying no as the sale fell through and gets it back in full. I believe they will lose some of the deposit as subject to finance clause had already finished when they asked for an extension.

Other wise what is the point of a contract?

Property is in Victoria.
 
My understanding is that in Victoria, if they haven't requested an extension of the finance clause by the due date, then it's assumed to be unconditional. If the subsequent sale doesn't proceed they loose their deposit. This does vary from state to state.

There may also be a technicality which allows for a couple of days extension on the finance clause. I think this has got something to do with allowing enough time for notification to be delivered.

The purchaser being willing to part with the deposit on the finance date tends to imply that they were willing to proceed unconditionally as well. As a result this might be arguable either way.

Until this is resolved, the deposit money should be left in the REAs trust account.
 
I'm not saying the solicitor is wrong, they've probably got a far better picture of the situation than you may be describing here. You should rely on your solicitors advice before anyone on this forum, but it doesn't hurt to challenge their statements.

If necessary, get a second LEGAL opinion.
 
Question on behalf of a friend.

A friend of mine is selling there PPR. Buyer offers $X and signs it to subject to finance. On the day of the clause due to end the buyer pays a deposit of $59,000. Couple days later he is asking for an extension for finance, by now the clause has expired.

If my friend says no to the finance does the buyer lose his deposit? The solicitor is saying no as the sale fell through and gets it back in full. I believe they will lose some of the deposit as subject to finance clause had already finished when they asked for an extension.

Other wise what is the point of a contract?

Property is in Victoria.


it all depends on what is in the contract.

Generally a buyer will be locked in if they have not notified the vendor or their solicitor that they are not proceeding by the finance date. If they are over this then they would be in a binding contract.
 
Thanks Terry. They are one day late and asking for an extension. They should have asked couple days before the deadline.
 
Thanks Terry. They are one day late and asking for an extension. They should have asked couple days before the deadline.

Would your friend really want to take the full deposit? I'm not sure if that is even legal. Perhaps some compensation for time wasted, but to take the full deposit would seem somewhat uncharitable....
 
Actually agent would take most of the deposit as legally they still get paid. Not much left for the vendors, just enough for compensation.
 
The friend isn't going to get the full deposit. The agent is first going to claim their commission. After all, they did their job, they got an unconditional contract.

I'm really not certain that the contract was entirely unconditional though. I have had solicitors tell me that 1 day late doesn't always mean unconditional. I'd tread carefully here.
 
It depends what is in the contract. And what else has been agreed to. But my understanding based on what you've said and a few assumptions, is that the buyer has every right to still attempt to settle. But if they can't, the seller is entitled to the deposit. And out of this comes any agent fees agreed to and so on. Whether they would accept the deposit or not is another matter, and has been "discussed" here before :D
 
Does your friend not want to sell it anymore?

If so, why not? And if they still want to sell it then what's the issue? It seems like the $59K deposit was almost a good will gesture - they are willing to lay down that much, they just haven't (for whatever reason) been able to officially get finance yet.
 
If the contract was not been amened I believe the solicitor is correct. General Condition 14.2(c) allows the purchaser '2 clear business days after the approval date...' to serve written notice ending the contract. What you have described is that the purchaser has withdrawn from the contract according to this General condition (this General Condition is in all Contracts of Sale in the State of Victoria)) so accordingly the purchaser definitely is entitled to a full refund of all monies paid to the vendor.
 
This is where it varies greatly from state to state.

In QLD B&P and Finance are not deeming, so
If you have not notified the seller by 5pm on the due date you have an ongoing right to terminate under that clause. HOWEVER, the seller may also terminate under that clause (after 5pm on due date and prior to you communicating that you are waiving or satisfying the condition).
 
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