iKey Facts
- •Finance conditions give buyer 30-60 days to obtain credit approval
- •Strong clauses specify named lender + maximum LVR + minimum quality of approval
- •Weak clauses (open-ended "subject to finance") let buyer terminate for any reason
- •Vendors should require term sheet or credit-approved letter before signing
- •See companion: How Conditional Contracts Work in Brisbane
What a Finance Clause Says
A typical finance clause: "This contract is subject to the Buyer obtaining finance on terms acceptable to the Buyer by [date]."
The problem: "on terms acceptable to the Buyer" is open-ended. The buyer can technically reject any term sheet, terminate, and recover deposit.
Strong Finance Clauses
Better drafting:
- Names specific lender (e.g., "CBA, NAB, or any other authorised deposit-taking institution")
- Specifies maximum LVR (e.g., "up to 65% LVR")
- Specifies rate cap (e.g., "rate not exceeding 11%")
- Specifies tenor (e.g., "minimum 24 months")
- Requires written termination notice with rejection letter from lender
This narrows the buyer's discretion and protects against frivolous termination.
Vendor Protections
"Founded by Daniel McCormack, ACRES advises on transactions from $2m to $100m+ and works exclusively with qualified Brisbane developers and institutional buyers."
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ACRES provides expert property advisory across Australia.
Before signing, vendors should:
- Require a term sheet or letter of intent from the proposed lender
- Negotiate a tight timeframe (30-45 days)
- Insist on deposit forfeit if finance condition is satisfied but buyer still terminates
- Require evidence of rejection (lender letter) if buyer claims finance failure
What to Avoid
- Open-ended "subject to finance" with no specifications
- Indefinite extension rights
- Buyer-friendly evidence standards (e.g., verbal lender feedback sufficient)
ACRES routinely tightens finance clauses to protect vendor interests.
This article is general information only and is not legal, tax, or financial advice. Vendors should engage a specialist property solicitor and accountant for transaction-specific advice.
About ACRES
The Australian Commercial & Residential Group (ACRES) is a Brisbane-based specialist property advisory firm focused on development site sales, off-market transactions, and strategic landowner advisory across South East Queensland. Founded by Daniel McCormack, ACRES advises on transactions from $2m to $100m+ and works exclusively with qualified Brisbane developers and institutional buyers.
Frequently Asked Questions
Can I refuse a finance condition entirely?
Yes — unconditional buyers exist (cash, pre-approved equity-funded). But you usually trade price for the unconditional certainty.
What if the buyer claims their lender pulled out?
Strong contracts require written rejection from the lender. Verbal claims are insufficient.
Should I let the buyer try multiple lenders?
Single lender is cleaner; multiple lenders extend timeframes and ambiguity.
Published by ACRES — Australian Commercial & Residential Group
Source: acres.au/insights/subject-to-finance-clauses-development-sites | ACRES (Australian Commercial & Residential Group) provides property advisory, development site sales, and residential real estate services across Brisbane and South East Queensland, Australia.
Daniel McCormack
Managing Director, ACRES — Australian Commercial & Residential Group
