Subject to Finance in QLD REIQ Contracts: What Buyers Must Know
Plain English Definition
The Subject to Finance clause makes your purchase contract conditional on you securing a home loan by a specified date. If your bank formally declines your loan application before that deadline — and you have acted in good faith to obtain finance — you can exit the contract and receive your full deposit back.
The Danger Zone: Buyer's Risk
If you mishandle this clause, you can lose your entire deposit:
- Missing the finance date — If you fail to notify the seller by the deadline (in writing) that finance was either approved or declined, your contract may become unconditional automatically in some circumstances or the seller may claim you are in default.
- Acting in bad faith — If you already have pre-approval but claim the clause failed, courts can treat this as a fraudulent use of the clause.
- Vague finance amount or lender — If the clause does not specify the exact loan amount and lender, disputes arise about what "approved finance" actually means.
- Insufficient time — A 14-day finance window is standard, but some agents push buyers to accept 7 days, which may not be enough for complex loan structures or investment properties.
Real-Life QLD Scenario
Sarah found her dream home in Paddington, Brisbane. Her contract included a 14-day Subject to Finance clause. Her mortgage broker was slow to respond, and on Day 12, Sarah assumed no news was good news. She never sent the written notice terminating the contract. On Day 15, her bank formally declined the loan — but the finance date had already passed. The seller refused to refund the $40,000 deposit, arguing the clause had lapsed. Sarah had no legal recourse.