Finance Clause in Victoria: When Can You Cancel a Contract of Sale?
Finance Clause in Victoria | Cancelling a Property Contract if Finance Is Declined
What Is a Finance Clause?
A finance clause is a Special Condition inserted into the Contract of Sale making the purchase conditional upon obtaining finance. It typically specifies the finance amount, lender (if applicable), finance approval date and the consequences if finance is not approved.
Are Finance Clauses Standard in Victoria?
No. Finance clauses are negotiated Special Conditions rather than part of the standard General Conditions. Every finance clause should be reviewed before signing.
When Can a Purchaser Cancel?
Generally where the contract contains a valid finance clause, the purchaser has genuinely applied for finance, finance is refused before the finance date, and notice is given in accordance with the contract.
Does the Purchaser Have to Make Genuine Efforts?
Yes. Purchasers should apply promptly, provide requested information and genuinely cooperate with the lender. A purchaser cannot deliberately prevent finance approval to escape the contract.
What If Finance Is Delayed?
How Do You Terminate?
Your conveyancer will review the clause, obtain supporting evidence where required, serve written notice before the finance date, and arrange for the deposit to be refunded where the clause has been validly relied upon.
What Happens Without a Finance Clause?
The purchaser remains obliged to settle. Failure to complete settlement may expose the purchaser to default interest, damages, legal costs and loss of the deposit depending on the contract and Victorian law.
Common Mistakes
Assuming pre-approval is unconditional approval; missing the finance date; not reading the Special Condition; attempting to terminate without legal advice.
How a Victorian Conveyancer Helps
Frequently Asked Questions
Is a finance clause compulsory? No. Can I cancel because I changed my mind? Generally no. Do I need a decline letter? It depends on the wording of the clause. Should I obtain legal advice? Yes.
Conclusion
A finance clause is an important protection for Victorian purchasers, but it only works if its requirements are strictly followed. Have your conveyancer review the contract before signing and seek advice immediately if finance is delayed or declined.
