What is a finance condition?

What it does

An offer on a sale and purchase agreement becomes a contract once you sign it and that acceptance is communicated. A finance condition means that contract exists but is not yet binding on both parties to settle, because one thing still has to happen.

The condition is for the benefit of the buyer, since it protects them. It has to be satisfied or waived by the date written in the agreement, and that is done in writing. If the date passes without that happening, the parties are into the cancellation provisions of the agreement rather than heading to settlement.

What to look at as the seller

• The date. A short period keeps the property moving. A long one ties the house up while the market carries on without it.
• Where the buyer already is. Pre approved with a bank and waiting on a valuation is a different proposition from someone starting the conversation after they sign.
• What the lending depends on. A buyer whose approval rests on selling their own house has a second sale sitting behind yours.
• The deposit and when it is payable. That is set by the agreement, not by a standard rule.

A cash offer, in the way the phrase gets used, simply means there is no finance condition. It does not mean the buyer is paying in notes. It means they are not asking for time to arrange lending.

What you can do while it runs

Unless your agreement says otherwise, you can keep marketing the property, and you can take a backup offer signed so that it only takes effect if the first agreement does not proceed. Check the wording with your lawyer before you do either.

What you cannot do is bind yourself to two unconditional contracts for the same property at the same time.

When the date arrives

The buyer either confirms the condition in writing, waives it, asks for an extension, or cancels. An extension is your call, and it is worth knowing what has actually gone wrong before you grant one.

Accepting, countering or cancelling are all legal acts with consequences you are bound by, so check the wording and the dates with your lawyer before you sign anything.