Creative use of “subject to” clauses

I’d probalby put “subject to you being happy with a building inspection report”. Once you have received that, if there is too much to be done then you are not happy and can opt out or renegotiate.

Good Luck
PK

Terry, what about the old “subject to partners approval” that Robert Kiyosaki and others have mentioned in other publications? Does this actually work and would vendors agree to it?

“Subject to finance”, “subject to valuation” and “subject to satisfactory pest and building inspection” are common clauses.

Robert Bou-Hamdan
Mortgage Adviser

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Comments made are of a general nature and should not be construed as individual advice.

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Hi Persistence,

I bought IP last april and I put “Subject to Building and Pest inspection”. After I got the report from the Building and Pest Inspection there were a couple of things needs doing. I forward the report to my solicitor. The vendor then fixed the problem before settlement. Everyones happy and I bought the property

Regards

Rickters

I saw this the other day… good luck if you can get anyone to accept it, and who knows they might. You may as well just write “subject to me changing my mind at any given moment”

John – 0419 198 856

In my experience,

you would probably get a “purchase subject to major structural defects” expiry within 14 days from offer.

I have found you have to be really lucky/smooth to get a “subject to purchasers satisfaction of building inspection report”

Very Big difference!!!!!!!!!!

It is also very unusual (smooth), to get vendor to make repairs prior to settlement unless you paid too much to start with.

I would suggest that you very clearly state the possible problems you may have that would prevent you purchasing property.

Ie; if you were borrowing 100% of the sale price, you could state that the deposit would be by means of a deposit bond only within 21 days and subject to 100% finance being available at settlement.(this is a very cheeky offer)

cheers

Lifexperience

Hi Michael,

Perhaps I heard it from you at the Reno Kings seminar in November? It’s not something I’ve personally used and I suspect that with your reputation as a frequent buyer you may have more luck getting it accepted than I would. It’s definitly worth being aware of though.

Cheers
Sonja

Hi Sonja

Youa er probably correct – I did mention it in my presentation.

BUt if I can use the cluase so can you.

Go for it, most agents don’t understand the power of that clause.

Michael Yardney
Metropole Properties
http://www.metropole.com.au

If you are trying to buy yourself some time to do some further due dilligence than I would suggest that you put subject to finance being obtained within 2-3 weeks ( obviously the later the better) from the expiation off the cooling off period. This should allow you adequate time to do what you need to do. Towards the end of the 2-3 weeks if you think that the deal may not be as good as you first thought than all you need would be a cover letter from any finance broker that you were unable to obtain finance. This will cancel the contract and will prompt the agent to refund your deposit so he can re sell the property. Another subject to clause I have seen work to purchasers favour is subject to aproval by the purchasers financial advisor. The remains very open ended and a hand written note from any financial advisor will cancel the contract. [grad]

I think that getting too creative with ‘subject to’ clauses can run the risk of the agent and vendor not taking you or your offer seriously and making you look as though you have no real commitment to buying. If you are building a relationship with an agent, this can be a relationship killer and good agents are hard to find. I believe that there is a difference between ‘creative’ clauses and ‘water tight’ clauses.

What kind of things will make you pull out of the deal?

I guess no finance approval and a clause that I use is “at the purchasers financial institution/s of choice by XX date’.

Building condition – ‘subject to a builders report to the purchaser’s satisfaction’.

Code violations – ‘subject to no council code violations’.

I think that these are quite common and legitimate clauses and give you outs and protection as needed. If you are only wanting to sign and then pull out because you can, then why sign in the first place? You would have hopefully conducted some research before signing on the dotted line.

Also, and please feel free to correct me if I’m wrong as I haven’t bought, sold or made an offer on a house in Victoria for some time, but isn’t there a law that states if you take a contract to a solicitor prior to the end of the cooling off period, then it voids the cooling off period. Once again, I may be wrong but this may have some affect on the ‘subject to solicitor’s satisfaction’ clause. I guess you can always put on an expiry date and not take the contract to the solicitor until after the cooling off period.

All the best…aussie

(formerly giraffe…New Year, New Nick, New Opportunities)

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