Hi
I am selling a property and buying another. The property for sale was sold "subject to finance" by a certain date. Before the date I was advised by the real estate company, that finances had been approved. I then purchased anothe property "subject to sale" of this property and "subject to finances". Finances were approved for me. All going well and just waiting for settlement, weeks go by and then one week before settlement the purchaser of our property contacts the real estate agency and says that his finances have not been approved, he is looking to get finances elsewhere but is left with two possibilties: getting finances and delaying setllement, or withdrawing from the contract. The property we purchased is due to settle the same day, but can not settle until the one we're selling settles. What's your thoughts?short term bridging finance.
Most loan approvals are only good for three months. If it goes past that date then a re approval is required.
It is always best to re apply before the three months is up.
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?Since they notified you that the finance was approved it is probably a binding contract. So you can issue a notice to complete and keep the deposit if they cannot – but then you have to resell it again. Or you could give them an extension. I would suggest issuing the notice to compete to get them moving faster and then holding off at the last min – if you wish.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Terryw,
Just wondering if they notified you that the finance was approved conditionally does that also make the contract binding? You would think that it shouldn't because what if you thought you got the loan, then happily telling the agent you got approval (who by the way is prob pressuring you for an answer everyday and you don't want to lose the house) then find out that the bank wont lend you money since one of the conditions can't be met, then what happens? Should you be binded by a contract when you could NOT get finance and lose your deposit when you specifically signed a contract saying that its "subject to finance"
This has always puzzled me that's all.
Hi Kimmy
I suppose it depends on the wording of your contract. If you say subject to approval with westpac bank for an amount of not less than $320,000 than i think a pre-approval will not make the contract binding as it is not approved yet. But if you were to tell the agent or the vendor the loan was approved when it wasn't then you are effectively giving up reliance on that clause and ratifying the contract – so you could be locked in.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Terryw. The term "approval" should not be used lightly then.
I think its up to the agent to clarify this when they seek for approval from buyers esp a first home buyer. I've seen agents who pushes for unconditional approval on paper (even though you might have told them its been approved) which is very professional but then I've seen agents who have the pre-approval on paper (which is not approval) and then use it as evidence for the contract to be unconditional when it clearly isn't. I think even some agents get confused which i find hard to believe.
BruceK: I hope it goes well for you. I know the feeling where you find a house that you absolutely love and couldn't imagine what would happen if you didn't get it through no fault of your own. I would definitely discuss this with the vendor and maybe try and get a longer settlement date.
I wonder if this is the same property some other guy in another thread is trying to weasel out of.
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