Hi all,
I have a couple of questions regarding contracts with "subject to" caveats that I hope you could help me with:
1. If a contract has subject to valuation – does this mean the valuation given by the bank or an independant valuer? Bank has come back with a valuation of $10K less than asking price, so does this mean I can push the sell price down by that $10K? Or should I still get an independant valuation done as well? I guess, I want to know if I can get renegoatiate the selling price, or get out of the contract due to the lesser valuation done by the bank?
2. If a contract states subject to finance – if my broker has gone to one bank, and that bank has knocked back the loan, can I get out of the contract? My broker has approached another bank in the mean time, and that bank has approved the loan verbally.
I don't want to get out of the contract, I just want to know my full options.
I appreciate any advice!
NicWhat is the exact wording of the caluses?
If the 'get out of jail clauses' are so loosely structured, then the vendor may be able to arrange finance or an val to satisfy those conditions. They need to be specific if you are going to be able to rely upon them.
The contract had "subject to finance" – initially, which was crossed out and valuation was inserted. I only realised this once the copy of the contract came through the mail. No other specifics, no nothing! Just the three words……
Talk to a solicitor. If the wording is just "subject to valuation" this may be uncertain. The solicitor will need to see the whole contract.
Will do……I know that is the obvious thing to do.
Thanks for all the comments, I really appreciate it!
Nic
"subject to valuation" is a pretty dangerous clause if that's all it says. In your case bank values it, the valuation comes in $10k short, but so what since the clause only says a valuation needs to be done, not satisfactory or to contract price or anything. Unless there is more wording we're missing than this is an empty clause.
As for the finance clause without specification of borrowing institution, I know if QLD the vendor could force you to proceed with the contract since you have only been declined by one lender. Personally I always use the clause "subject to finance approval to buyers satisfaction" and if you're really picky "subject to finance approval to by commonwealth bank for $285,000" as some lenders will not decline you but say you are approved for $x less than you were seeking.
Hope your other finance is arranged ok for you and good luck,
Andy
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