Experts recommend a buyer obtains unconditional approval of finance before they sign a contract to buy a home. Photo: File.
So you’re ready to make an offer on a home. Congratulations! But what does ‘subject to finance’ mean, and what if it isn’t included in your home purchase contract?
‘Subject to finance’ means in essence that, if a home loan is not approved, the buyer has the ability to pull out of their contract without major repercussions.
However, while once common, this clause is now rarely a standard inclusion in the ACT and NSW.
Specialist in conveyancing and property law and director at Velocity Conveyancing Andrew Satsias says the change is all about ensuring an even playing field.
“What used to be common practice 15 to 20 years ago is now quite rare, simply because it exists only to benefit the buyer,” Andrew says.
“Nowdays, we always recommend a buyer obtains unconditional approval of finance before they sign a contract and commit to a purchase rather than relying on something like a subject to finance clause.”
Andrew says it is important to engage a solicitor to ensure you’re ready before making an offer, whether you plan on doing so at auction, before auction, or through a regular negotiated purchase.
“For an auction purchase, it’s especially important to have finance approval and a review of the contract before you attend,” Andrew says.
“This is because if your offer is successful, you are bound to buy in.
“Standard negotiated purchases are more straightforward, but we still make sure to work with our clients so that they fully understand their contract before they commit to it and pay the deposit.”
It’s recommended a buyer obtains unconditional approval of finance before they sign a contract. Photo: File.
When it comes to a pre-auction sale, offers may involve a request for the buyer to waive their cooling-off period. In order to do so, buyers must have a section 17 certificate signed by a solicitor.
A section 17 certificate confirms that you have had a conversation with your solicitor and fully understand that upon its handover, the cooling-off period will be waived and your contract will be binding and unconditional from the moment of exchange.
“Legislation provides for a five-day cooling off period for you to get some legal advice and decide whether you wish to proceed with the purchase,” Andrew says.
“You may be asked to waive this period using a section 17 certificate if you’d like to make a pre-auction offer and secure the property.”
Andrew says staff at Velocity Conveyancing are experts in property purchase law, and provide their services to more individuals than any other solicitor’s practice in the Canberra region.
“We are one of the few law firms that specialises in this area of law in the ACT,” Andrew says.
“This means all of our staff have the expertise to provide advice on the legal risks associated with any property purchase.
“We can also steer them toward proper advice from qualified experts such as builders, accountants, brokers and valuers.”
Established in 1968, the Velocity Conveyancing Group has more than 50 years of experience in the ACT, NSW and Victoria. They have local offices in Canberra City, Belconnen, Gungahlin, Tuggeranong, Inner South and Woden.
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