TOM Wood, of Ferguson Cannon Lawyers, answers this weekas question.
Q: A buyer has gone to contract with a cash unconditional contract but funds are not available to settle. What are the legal implications?
A: In Queensland, a property buyer must hand over cleared funds at settlement in exchange for the documents required to settle.
Where a contract is unconditional, or was subject to finance approval that was achieved, a buyer who doesnat have the money at settlement will usually be in breach of the contract.
A buyer will sometimes unexpectedly be short of funds for settlement.
For example, finance approval for an off-the-plan purchase may be reduced or cancelled where the bankas valuer or the mortgage insureras valuer think the finished product is worth less than the original purchase price.
This happens at short notice, leaving the buyer short of funds.
If the buyer does not have enough money to settle, it is a good idea to raise the issue with the seller before settlement.
A price reduction, settlement extension or release from the contract can be requested, but the seller does not have to agree.
These communications must be made in a particular way and should be made by the buyeras solicitor. A legal review of the contract should also be made in case it is one of the rare cases where a buyer has a valid legal reason to walk away from the contract. …