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Subject to Finance Clause

If you intend to borrow money from a bank or lending institute when purchasing a property, your Contract should be made subject to a finance clause. This will allow you to terminate the Contract and recover your full deposit in circumstances where you are unable to obtain finance, subject to terms and conditions.

A finance clause is only applicable to private sales, not public auctions. If the Contract is made “subject to a loan/finance”, then the Particulars of Sale of the Contract must be completed to reflect this. The standard practice is to make the Contract subject to a finance period of 14 day from the date of signing of the Contract.

Finance extensions can be requested if there are delays in obtaining the finance approval. If the vendor is not agreeable to any extension the Contract can either be terminated or the purchaser can decide to proceed unconditionally without securing the finance.

If finance is not unconditionally approved by the approval date and the purchaser does not want to risk proceeding unconditionally, then the purchaser can only avoid the Contract if:

  • the purchaser has immediately applied for the loan;
  • the purchaser has done everything reasonably required to obtain approval of the loan;
  • the purchaser has served written notice on the vendor ending the Contract on or before 2 business days after the approval date; and
  • the purchaser is not in default under any other condition of the Contract when the notice is given (including payment of the full deposit if due).

If these conditions are not met, the purchaser cannot avoid the Contract, even if your loan is not approved.

If finance approval has not been obtained by the approval date, the purchaser’s lawyer or conveyancer must be immediately contacted so that they can give notice to the vendor bringing the Contract to an end. Upon termination of the Contract, the full deposit must be refunded to the purchaser. Termination of the Contract pursuant to a finance clause, must be clearly communicated within the time limits set by the condition. Without this notice being issued, the Contract will not be rescinded, and a purchaser will have to proceed with the Contract whether or not they have finance approval.   

A finance clause is a condition for the benefit of the purchaser only but there are conditions that apply to its use.

For further information on finance clauses or to make an appointment, please contact us on 5303 0281 or at

The information on this website is of a general nature only. It is not, nor is it intended to be legal advice. You should consult a lawyer for individual advice about your particular circumstances.

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