What is the effect of a 'subject to finance' condition in a WA Offer and Acceptance?

Q: What is the correct answer to: What is the effect of a 'subject to finance' condition in a WA Offer and Acceptance?

The correct answer is The buyer has a right to terminate if they cannot obtain finance approval by the specified date, but must notify the seller. Option B is correct because a subject to finance condition gives the buyer the right to terminate if they cannot obtain finance by the specified date. The buyer must take reasonable steps to obtain finance and must notify the seller if the condition is not satisfied. The contract remains on foot until the buyer exercises their right.

Q: What background knowledge is needed for this Contracts Conveyancing question?

Subject to finance is the most common condition in WA offers. It typically specifies the loan amount, lender, interest rate parameters, and a deadline date. The buyer must take all reasonable steps to obtain approval. If the condition date passes without finance, the buyer can terminate by written notice.

Q: What is a good way to remember the answer to this Contracts Conveyancing question?

Subject to finance gives the buyer a right to terminate, not automatic void. The buyer must notify the seller — no notice means the contract continues. Remember: conditions don't auto-terminate contracts. The buyer must actively exercise their right by notifying the seller.

Q: What exam tip applies to this Contracts Conveyancing question?

Key distinction: the contract doesn't become void automatically — the buyer must take active steps to terminate.

Q: How does this Contracts Conveyancing concept apply in Australian real estate practice?

A buyer offers on a Midland property subject to finance by April 15. On April 14, the bank declines their loan. The buyer must notify the seller in writing before the condition date that finance was not obtained, exercising their right to terminate and receive their deposit back.

Question

Contracts ConveyancingWAMEDIUM

What is the effect of a 'subject to finance' condition in a WA Offer and Acceptance?

Answer Options

A

The buyer must obtain finance within the specified period or the contract becomes void automatically

B

The buyer has a right to terminate if they cannot obtain finance approval by the specified date, but must notify the seller

C

The seller is obligated to arrange finance for the buyer

D

The condition only applies if the property is valued below the offer price