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Signing a contract subject to finance feels safe until the finance itself becomes uncertain. This guide covers how the standard finance condition works in Queensland, what buyers are generally required to do, and why acting quickly matters if approval looks shaky.
The Finance Condition, in Basic Terms
The standard REIQ contract generally includes a finance clause, making the contract conditional on the buyer obtaining loan approval by a specified due date. Until that condition is satisfied or the date passes, the contract is not yet unconditional.
Dates and Deadlines Matter
The finance due date is a firm deadline, not a general guide. Under the standard clause, the buyer is generally required to give written notice to the seller by 5pm on that date, confirming whether finance has been approved. Missing this deadline can have real consequences, so know the exact date in your contract and treat it as non-negotiable.
Lender Valuation Issues
One of the most common reasons finance falls through, or is reduced, is the lender’s own valuation of the property coming in below the contract price. This can happen even when you feel confident about your income and borrowing capacity, since it depends on the lender’s assessment of the specific property, not just your finances.
Conditional vs Unconditional Approval
A conditional or in-principle approval from your lender is not the same as the formal, unconditional approval needed to satisfy the finance clause. Only approval specific to the actual contract and property satisfies the condition, so do not assume an earlier pre-approval automatically carries through.
Buyer Obligations Under the Finance Clause
Buyers are generally expected to take reasonable steps to obtain finance, such as applying promptly and providing requested documentation to the lender without unnecessary delay. What counts as reasonable steps in a specific situation is a question of fact and contract interpretation, which is why this is an area for advice rather than assumption if a dispute arises.
Why Written Notice and Contract Wording Matter
The exact wording of your contract’s finance clause determines what happens if notice is not given by the deadline, in either direction. In some circumstances, this can be treated as the condition being satisfied, or it can expose the buyer to a default claim from the seller. This is genuinely a situation where the specific wording of your contract controls the outcome, not a general rule that applies the same way every time.
Risks If the Contract Becomes Unconditional
Once the finance condition, and any other conditions, are satisfied or lapse, the buyer is generally bound to complete the purchase regardless of their finance situation at that point. Failing to complete an unconditional contract can put your deposit at risk and potentially expose you to further claims from the seller, which is why finance uncertainty needs to be resolved before, not after, the contract becomes unconditional.
Contact Your Solicitor and Lender Immediately
If your finance looks uncertain as the due date approaches, contact your conveyancer or solicitor and your lender straight away, not after the deadline has passed. Acting early gives you options, such as formally terminating under the finance clause, that disappear once the deadline is missed.
Cooling-Off Is a Separate Mechanism
Queensland’s statutory cooling-off period is separate from the finance clause, with its own timeline and rules, and does not apply to every purchase. See our guide to the Queensland cooling-off period for how it works and when it does not apply, such as at auction.
Where This Fits Into Your Research
See our guides to deposits, finance clauses and upfront buying costs and choosing a conveyancer or solicitor.
Where Narevella Can Help
Our free Queensland Property Research Checklist covers the wider pre-purchase research process. For a specific address, our Property Review can help.
Disclaimer
This guide provides general research information only and is not legal or financial advice. What happens if your finance falls through depends on your specific contract wording and circumstances. Contact your conveyancer, solicitor, and lender immediately if you have any doubt about meeting your finance condition deadline.
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