Finance Clause in a Sale and Purchase Agreement

5 August 2020

Pre-approved finance, ain't all that.

There is a risk to signing an unconditional sale and purchase agreement – even though you have your finance pre-approved. Often bank instructions are such that they require us as lawyers to advise them of any title defects. So even if our client instructs us not to let the bank know about a title defect, if we fail to advise the bank of the existence of same, then we are in breach of the undertakings we give the bank in our Solicitors Certificate.

Also, bank instructions to us, require us to advise them of any building consent or resource consent issues as soon as we become aware of them. A LIM report will record all the building and resource consents registered on the property.

Again, if we fail to advise the bank of any such building consent or resource consent issues that we know about (irrespective of whether or not the client’s contract to buy is unconditional or conditional) then we will be in breach of our undertakings contained in our Solicitors Certificate. This means that the bank cannot process funds because they do not have a Solicitors Certificate. Hence a client may not be able to fund the settlement.

All of which means that pre-approved finance, ain't all that. Even if a client doesn’t need any finance to buy a property, it is still unwise for them to sign up an unconditional offer to buy a property – well, unless they have first carried out due diligence on the property concerned.

Before you ever put pen to a Sale and Purchase Agreement, we cannot emphasise enough how important it is to get the contract reviewed. We are happy to review a Sale and Purchase Agreement for you before it is signed. If you have a contract that needs to be reviewed, please email a copy through to us.

Weston Ward & Lascelles are leading property and conveyancing lawyers based in Christchurch. Our property and conveyancing legal team is highly experience with buying and selling residential and commercial property and we are happy to guide you through the entire process. Contact our team today.

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