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How Not to Lose your Deposit on a "Subject to Finance" Contract

This was a fight that went to trial, and then on appeal, over a $13,000 deposit in a "subject to finance" contract.

In Hauff & Anor v Miller [2013] QCA 48, a Buyer entered into a contract for a $600,000+ property and chattels in Port Douglas, paying a $13,000 deposit. The contract was "subject to finance" as follows:

"This contract is conditional on the Buyer obtaining approval of a loan for the Finance Amount ($400,000) from the Financier (ING) by the Finance Date (10/9/10) on terms satisfactory to the Buyer. The Buyer must take all reasonable steps to obtain approval.

The Buyer had pre-approval from ING for $200,000 but told the Buyer a new application had to be lodged which meant the Financier couldn't approve by the Finance Date. The Buyer then sought finance from another bank (The Rock) but didn't inform the Seller of the change. The Buyer was granted extensions of the finance date to 17/9/10 but finance had not been approved. The Buyer then terminated the contract.

The Seller complained that:

  • the Buyer did not take "reasonable steps" to obtain fiance from ING; and

  • this amounted a repudiation of the contract entitling the Seller to terminate and claim deposit.


  1. The Judge decided that the Buyer did not take "reasonable steps to obtain finance".

  2. There was no evidence that finance from ING could not be obtained by 17/9/10.

  3. The onus of proof is on the Buyer to prove that reasonable steps were taken.

  4. Consequently the Seller was entitled to the Deposit plus interest.


A subject to finance REIQ contract obliges the Buyer to take reasonable steps from the financier nominated. If there is a change in financier, we recommend obtaining agreement to the variation. To not do so may put a buyer in breach should finance not be approved.

The obligation to obtain finance must be seriously pursued. The clause will only offer protection when the clause is properly adhered to. The case suggests that the clause is for the benefit of both parties.

The Buyer may have won the case if it had produced evidence from ING that ING would not have advanced finance.

For more information please contact: Evan Sarinas of Sarinas Legal.

This release is not intended as legal advice and all liability is disclaimed for reliance on it.

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