The Importance of Finance Clauses: Major Banks tightening lending conditions
Whilst it is common knowledge that the major banks have tightened their investment lending criteria to unit purchasers in Brisbane, recent industry news has pointed to major banks tightening their lending rules further by applying more stringent conditions on properties located in certain postcodes, such as mandating that buyers have at least 20% equity in the property.
Therefore the finance clause becomes an important clause for both buyers and sellers of these properties.
Potential buyers will want to ensure that the finance clause is drafted in a manner that allows them the right to terminate should finance approval not be forthcoming, even if the finance condition date has passed. Otherwise buyers may be locked into a contract they cannot complete.
Alternatively, sellers may consider modifying the standard REIQ contract finance condition to allow finance to be deemed satisfied if the buyer has not terminated the contract by the finance due date.
Therefore the drafting of finance clause must be considered in light of the party’s position in the transaction and personal circumstances.
Creevey Russell Lawyers has extensive property experience throughout both its Brisbane and Toowoomba office, and can offer pre-contractual review and advice as part of the conveyancing process if you require.
Please contact Damian Bell or Daniel Birch at Creevey Russell Lawyers on (07) 4617 8777 for further information.