First Home Buyers: How Well Did You Read The 'subject To Finance' Clause?

Law Blog

Purchasing your first home is an exciting time, but you may well find that you have family members encouraging you to handle the process yourself, as it's not really too hard. The problem is that if you're not experienced in fully understanding the different clauses in a conveyancing contract, a small misunderstanding can turn into a very expensive mistake. Take the 'subject to finance' clause for example. This clause alone should be enough to convince you that using a conveyancing lawyer to at least read over your first contract is a wise monetary investment.

What You Think The Clause Means

Many home buyers, especially those not used to the buy/sell process, believe that a 'subject to finance' clause means that if they can't raise the finance needed to purchase the home, they can withdraw from the contract provided the seller's lawyer is advised of this prior to the clause date specified in the contract.

However, this is not always true. Not all contracts have the exact same wording, and these minor word changes that could leave you open to being sued for not completing the contract if you incorrectly try to terminate due to lack of finance.

What The Clause Could Really Mean

It is true some 'subject to finance' clauses do state a contract can be terminated at a specific date if finance is not obtained and the deposit already paid will be returned.

However, take for example the added words 'best endeavours.' If the contract states the purchaser must make their best endeavours to obtain finance, and the seller's lawyer can prove the purchaser did not do so, then the contract can't be cancelled under the 'subject to finance' clause. So, if you have been offered enough finance to complete the contract, but you don't like the interest rate being offered, you might think you can cancel the contract by using the 'subject to finance' clause. However, this clause is not about whether you could obtain finance that is satisfactory to you, it is about whether you could obtain finance period. The information that you were made an offer of finance could be used as a weapon against you.

Not only could it be used to make you forfeit the deposit, but you could also be sued for not completing the contract and that is a situation no home buyer wants to be in.

For the small cost of obtaining conveyancing advice from a lawyer, at the very least have them read through the contract so every important clause is fully explained to you. Doing so will make all the difference in how successful your first home contract will be.


9 May 2016

Helping employees deal with unfair bosses

In my job as a student advisor I hear a lot of complaints about the unfair conditions that some bosses impose on their employees. I'm not a lawyer, but I am very familiar with which conditions are actually illegal and which are just things that some employees don't like being asked to do — like clean the toilets. This blog has some resources to help employees know if what their boss is asking them to do is illegal or just annoying. Knowing even just a little bit about the law can go a long way in making sure you're being treated properly.