If you need the money from the sale of a property you own to fund a property purchase, one option is to make the purchase of your new property conditional on the sale of your current property.
This is known as your purchase contract being ‘subject to sale.’
How Do I Make My Purchase Contract Subject To Sale?
A special condition must be inserted in the contract of sale to make the purchase conditional on your existing home selling.
What Special Condition Do I Need?
There are many types of special conditions that can make your new property purchase subject to the sale of your existing home, and it is important to seek legal advice prior to signing any contract to ensure that your interests are protected.
For example, this type of special condition can be drafted so that the Buyer has the option to:
cancel if they don’t enter into a sale contract within a given amount of time,
cancel if that contract doesn’t go unconditional,
require the purchase to settle on the same date as the sale
cancel if the sale does not settle.
As you can see, these types of clauses, though reasonably common, can be quite complex in practice and it is critical that you have a clause inserted that is suitable for your needs.
Example Special Condition
The clause below is an example only, and it won’t be suitable for everyone.
At Keylaw, we offer complimentary pre-contract review and can even assist you with drafting a special conditions tailored to your situation.
(a) This Contract is conditional on:
(i) The Buyer entering into a contract of sale for their property situated at [insert address] (” the Buyers Contract”) on or before thirty (30) days from the Contract Date; (ii) The Buyer’s Contract becoming unconditional on or before fourteen (14) days from the date of the Buyer’s Contract; and (iii) Settlement of the Buyer’s Contract on or before thirty (30) days from the date of the Buyer’s Contract.
(b) The Buyer must:
(i) give a copy of the Buyer’s Contract to the Seller when the Buyer signs the Buyer’s Contract; (ii) advise the Seller when each condition in the Buyer’s Contract has been satisfied, and (iii) advise the Seller as soon as settlement of the Buyer’s Contract has occurred
(i) The Buyer’s Contract has not been entered into on or before thirty (30) days from the Contract Date; or (ii) Settlement of the Buyer’s Contract has not occurred on or before thirty (30) days from the date the Buyer’s Contract was entered into; either party may terminate this Contract by notice to the other in which case the Deposit shall be refunded to the Buyer in full.
(d) This Special Condition is inserted for the benefit of the Buyer and the Buyer may waive the benefit of this Special Condition by giving notice of such in writing to the Seller.
(e) The settlement date of this Contract will be simultaneous with the settlement of the Buyer’s Contract.
What Are My Other Options?
Other options include;
Taking out a bridging loan. Bridging finance might be an option depending on your situation. Remember to seek professional advice and speak to your lender.
Selling your current property and renting until you are ready to buy.
The right choice for you will depend on your personal objectives and financial situation. It is always important to seek professional advice if you are unsure .
If you have any questions about buying subject to sale or any other aspect of conveyancing, contact us today. Our friendly, expert conveyancing solicitors are waiting to take your call!
Whether you are buying or selling, our dedicated team will work with you to ensure your property settlement is a stress free and exciting process. We want you to feel that you are in control of the conveyancing process, not that the process is in control of you. Let us show you how easy it can be.