If a contract is terminated due to a purchaser’s failure to have adequate finance in place, the consequences can be significant.
The purchaser will forfeit the deposit paid on exchange, remain liable for the balance of the 10% deposit where a reduced deposit (such as 5%) was paid, be responsible for the vendor’s costs and expenses arising from the termination, and will also be liable for any shortfall if the property is re-sold for a lower price.
For this reason, purchasers must ensure they have satisfactory finance arrangements in place before participating in an auction. A successful bidder at auction is required to exchange contracts unconditionally immediately following the auction and pay the deposit in accordance with the contract.
Brooklyn Lawyers provides detailed contract reviews for purchasers buying property in NSW and advises on the risks associated with finance and auction purchases.