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Do I have to prove lack of finance to back-out?

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  • Do I have to prove lack of finance to back-out?

    Hi

    Just want ed to check something with regards to S&P agreements.

    If I have included a 'subject to finance' clause and I want to pull out of a deal, do I need to show proof of this to the vendor?

    Or I simply ring and tell them I couldnt get the finance and thats that.

    (just to clarify - im not referring to a 'due dilligence' clause.)

    cheers

  • #2
    You have to prove it if asked Swiss. I have one of these at the moment where the buyers broker rung and told us they were approved, then the buyer's solicitor faxed cancelling because they had been declined. Rather than get sued they are now settling.

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    • #3
      Swiss, do a search on that topic. It's been discussed several times at length on these forums.
      Squadly dinky do!

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      • #4
        Originally posted by Dean Letfus View Post
        You have to prove it if asked Swiss. I have one of these at the moment where the buyers broker rung and told us they were approved, then the buyer's solicitor faxed cancelling because they had been declined. Rather than get sued they are now settling.
        Dean thanks for the reply.

        In your example, why is there a possibility of the buyer being sued? It sounds like they have to pull out due to a genuine lack of finance. As opposed to them wanting to pull out for whatever reason (but claiming they can't get the finance.)

        However of course they shouldnt have said they were approved when they wearn't!

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        • #5
          Originally posted by SwissTony View Post

          However of course they shouldnt have said they were approved when they wearn't!
          Maybe they said they weren't when they were.

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          • #6
            They are approved, that's the point. Their lawyer is lying.

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            • #7
              The buyers would have fair claim to pull out if the clause was written well enough ie. "Finance that was suitable and acceptable to the purchaser".

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              • #8
                That is right Steve
                But they still have to take reasonable measures to fulfill the contract ie apply for finance. And if they are offered it from someone who they applied to it would be a hard sell to then claim that the finance wasn't suitable or acceptable to the purchaser since they applied for it after all. Of course IANAL and all that.

                Cheers
                David
                New to property investing? See: Best PropertyTalk Threads for New and Old Investors And/Or:Propertytalk Wiki

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                • #9
                  thanks guys. And Due Dilligence is different.?

                  You can get out of an offer without documents to prove why.

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                  • #10
                    You may have a case to prove that you indeed did do some Due diligence of some sort.

                    I word my clause's along the lines of "I may do due diligence that may or may not include professional reports".

                    It all depends on what your trying to achieve going in and by far honesty in your intentions is the best policy.

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                    • #11
                      Steve. I'm rather new to this game. When you put offers in on properties, do you provide the S&P agreement? Or it is it drawn up by the Real Estate Agent?
                      I will be buying my first property soon. Thus far I've made two offers. The first time the S&P agreement was drawn up by a property finder and the second time, by the real estate agent. I've been a bit concerned about what I was agreeing to.
                      Should I be drawing up my own S&P agreements?

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                      • #12
                        Hi Tony,

                        Yes I write my own S and P agreements unless they get complicated enough to involve my lawyer.

                        It's a very useful skill to learn and from memory Dean has a great tutorial on doing this that I'm sure someone will link for you.

                        In all case's be very careful about what it is you are agreeing to and if in doubt "DON'T SIGN".
                        Just take it to your lawyer and get him/her to check it over.

                        Also remember that it's your offer not your agents offer so don't let anyone bully you into putting anything into an agreement that you don't understand or don't want in the agreement.

                        You have the upper hand at all times because you can simply walk away.

                        Steve

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                        • #13
                          Found it myself...

                          http://www.propertytalk.com/forum/sh...56&postcount=2

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                          • #14
                            Originally posted by Dean Letfus View Post
                            They are approved, that's the point. Their lawyer is lying.
                            And I bet the Lawyer and purchaser aren't happy with the broker for sending you the fax 1st

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                            • #15
                              :-) Big miss by the broker :-)

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