Beware Of The Long-Term Finance Condition

A purchaser recently signed a contract to purchase an off the plan property, but could not have his home loan approved until his wife returned to work after maternity leave. The estate agent advised him to use the finance condition in the contract, and to set a long period of time to allow for the maternity leave. The estate agent explained that this would give the purchaser plenty of time, and that he would not have to apply for his home loan until next year.

Problem: General Condition 3 of the standard Contract of Sale of Real Estate, and reproduced in the standard Contract Note, requires that a purchaser must have “made immediate application for the loan”, failing which the purchaser is in breach and cannot rely on the finance condition.

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