When you have fund but don't have funds

By Pamela Wardle, Legal Practitioner Director
 
When purchasing a property, it is vital to ensure you have access to enough funds to complete the transaction when required (ie on the settlement date).  Some common pitfalls in obtaining funds for a purchase are:

1. Cheques: All cheques, including bank cheques, have minimum periods before for the funds are clear in the receiver’s account.  This may be the case even if you have requested a special clearance for the cheque.
   
2. Term Deposits: Banks may require certain notice periods (eg up to 30 days) to release funds without penalty.  These time periods may be difficult to accommodate in short contracts.
   
3. Pre-approved loans: Home loans are commonly approved based on serviceability and sufficiency of security.  Having pre-approval for a loan means the bank agrees that you can service (ie repay) the loan but does not mean that the property is sufficient security for the loan amount.  Even if you have pre-approval for a loan, your bank may still need to conduct a valuation on the property to be satisfied that the security is sufficient before your loan is unconditionally approved.
   
4. Insurance or superannuation payouts and court proceedings: Payouts and proceedings are the most uncertain source of funds as they may be subject to delays for a broad range of reasons before funds are actually paid into your account.  
   

It can be incredibly risky to sign a contract which is not conditional upon finance or obtaining funds from other sources.  Call us to assist you in making sure you have your funds when you need to have your funds.