Thank you for your response. Three months have not passed. The problem is that the guy buying our house informed the real estate agent that finances were approved. He did this before the "subject to finances" date had passed. Now one week before settlement, he tells the agency that finances are not approved. The agent has no confirmation in writing that the finances were approved. The next problem is with the house we have purchased as that is dur to settle the same day, but can not settle without the funds that are required from the sale of the other house.
My understanding is that since the contract has gone well past the "subject to" dates then the  contract is uncondtional, therefore the vendor will be liable to buy our house, but if he cant get the finance what would happen? Where does this leave our new property?