Clause 3 of the REIQ contract provides that the contract is conditional on the buyer obtaining approval of a loan for the finance amount from the financier by the finance date on terms satisfactory to the buyer. Clause 3 is only activated if each of these three items (finance amount, financier and finance date) is completed. The expression ‘on terms satisfactory to the buyer’ permits a buyer acting honestly to decide whether any finance offered suits the buyer’s particular needs. The clause stipulates that, when there is a failure to obtain the type of finance specified and that failure is not due to a fault of the buyer, the buyer has the right to terminate the contract and to receive all deposit monies back.
Clause 3.1 specifies that a buyer must take all reasonable steps to obtain approval. A buyer is not able to escape contractual obligation simply by not applying for finance. In fact, a failure to apply for finance approval would constitute a breach of contract. Buyers should be careful before they advise that finance approval has been obtained. Buyers should carefully consider the terms of the offer of finance to ensure it is what they need and what they applied for.
