- This is usually written as suspensive condition, so read the section just before this one about suspensive conditions.
- If you are the buyer, make sure that the clause states
- that the agreement is not binding on you unless you secure mortgage finance
- for a particular amount
- or such lesser amount as you confirm is acceptable
- by a particular date
- on such terms as you have confirmed in writing are acceptable to you;
- and that the condition is inserted for the sole benefit of the buyer.
- Beware of a clause which does not contain all of these, as you may be granted mortgage finance on conditions that are difficult for you to meet and in that case you may want to walk away from the deal. (For example, the bank may want you to give a suretyship by someone else who is not prepared to do so.)
- On the other hand, as the seller, you want certainty as soon as possible, so you will try to negotiate for language in this clause that makes the clause fulfilled once the buyer is given any offer of a loan for that amount in principle, leaving it up to the buyer to make sure he can meet the bank’s loan conditions.
- Any condition which is not for the sole benefit of the buyer cannot be waived by the buyer alone. The agreement should provide whether the buyer can waive this condition.
- Just because you have your mortgage does not mean your work is done. Be prepared to:
- chase your bank to instruct its attorneys to register the bond as soon as possible. You will no doubt have a guarantee deadline to meet.
- chase the bond attorneys to prepare the bond documents as soon as possible. Only once they are signed and approved by the bank will the bank authorize the issue of the guarantees for payment of the bond proceeds.
- Remember that you will need to guarantee the full purchase price. If your mortgage bond does not cover the full amount, you may have to arrange guarantees for the cash balance you will have to pay. There are both expensive and cost-effective ways of doing this which protects your money until transfer and makes sure that you continue to earn interest on it. Contact us to help you find a safe and cost-effective way to do this or speak to your attorneys.
