What Is Finance Condition in Queensland Real Estate? Definition and Agent Guide

A buyer has just signed the contract. The deposit is lodged. The seller has taken the property off the market. Then, fourteen days later, the buyer’s solicitor calls: finance has been declined. Whether that call ends with a clean termination and a full deposit refund — or with a dispute, a withheld deposit, and potential litigation — depends almost entirely on how the finance condition Queensland contract was drafted, and whether the buyer met their obligations under it.

A finance condition (also called a subject-to-finance clause) is a condition precedent in a Queensland contract of sale that makes the buyer’s obligation to complete the purchase contingent on obtaining loan approval from a specified financier, for a specified amount, by a specified date. If approval is not obtained and the buyer terminates correctly, the contract ends and the deposit is refunded. If the condition is not properly activated — or if the buyer fails to take all reasonable steps to obtain finance — the legal consequences fall heavily on the buyer, not the seller.

How Finance Condition Works in Queensland Real Estate

The Three-Part Trigger in Clause 3

Clause 3 of the REIQ contract provides that the contract is conditional on the buyer obtaining approval of a loan for the finance amount from the financier by the finance date on terms satisfactory to the buyer. Crucially, Clause 3 is only activated if each of the three items — finance amount, financier, and finance date — is completed in the Reference Schedule.

This is a point agents regularly mishandle. Unless all of “Finance Amount”, “Financier”, and “Finance Date” are completed, the contract is not subject to finance and Clause 3 does not apply. Leave any one of these fields blank, and the buyer has no contractual protection. If any of the sections such as “finance date”, “finance amount”, or “financier” are left blank, the contract may not be subject to finance, with some exceptions if special clauses are included. For a buyer relying on a loan to complete, that omission can be catastrophic.

The REIQ/QLS property contracts are the most common form of sale contracts used in Queensland. The terms are settled by the REIQ and QLS and are updated with changes in law and in technology. The current version for residential houses and land is the Nineteenth Edition, with corrections released in September 2024.

What Goes in the Reference Schedule

The Reference Schedule items are often completed with the finance amount listed as “sufficient to complete” and the financier as “buyer’s choice” or similar. The finance date is usually set between 14–21 days after the contract date. However, the wording used in these fields matters. Where a specific financier is named, the buyer is contractually bound to apply to that lender — not simply any lender they prefer. Where “buyer’s choice” or equivalent language is used, the buyer retains more flexibility, but the obligation to take all reasonable steps still applies.

There are two stages of finance approval to understand: conditional approval, which is a tentative green light from the lender with outstanding requirements still to be met, and unconditional approval, which means every lender condition is satisfied and the loan is fully approved. The finance condition requires unconditional approval — conditional approval does not satisfy the clause. An approval subject to valuation or on normal bank terms is not an unconditional approval contemplated by the contract.

What Happens at the Finance Deadline

The finance date is a hard deadline, and the clock runs to 5:00 pm. If the buyer elects to terminate the contract under the finance condition, they must notify the seller in writing before 5 pm on the finance date. If the buyer fails to provide notice to the seller, the seller will have rights to terminate the contract at 5:01 pm.

There are three possible outcomes when the finance date arrives. If a buyer does not obtain satisfactory finance approval from the financier specified in the contract, they can terminate the contract or seek an extension of time for finance. Agreement from the seller is required for any extension and the request may be declined. Alternatively, a buyer may give notice to the seller waiving the benefit of the finance condition, which means the buyer is bound to complete the contract regardless of whether their financier approves finance or the terms are satisfactory.

One more scenario is often overlooked. If a buyer does not notify the seller in writing that finance is approved, waived, or not approved by the finance date, the contract continues and both parties have a right to terminate. Buyers then have a continuing right to give notice of satisfactory finance or waiver, but only if it is received by the seller before they terminate. This is the grey zone where deals fall apart unnecessarily — where neither party acts and the contract drifts into a legally uncertain position.

Why Finance Condition Matters for Queensland Agents

The Risk Sits on Both Sides of the Transaction

Agents acting for sellers sometimes treat the finance condition as the buyer’s problem. That is the wrong frame. A poorly managed finance period creates risk and uncertainty for the seller: the property is effectively withdrawn from the market for the duration, and if the condition lapses without proper notice either way, the seller’s right to re-list and the buyer’s liability are both unclear until a solicitor clarifies the position.

For sellers, including a finance clause can attract more potential buyers who may require a loan to buy the property. It ensures that the sale process is transparent and sets clear expectations regarding the buyer’s financial obligations. A finance condition is not a favour to the buyer — it is part of the commercial reality of most transactions. Refusing to accept it where a buyer genuinely needs finance rarely results in a better deal; it usually results in no deal.

For buyer’s agents, the finance condition is one of the primary instruments protecting the client’s deposit. If a buyer does not receive satisfactory finance approval by the finance condition due date, they can terminate the contract and receive their full deposit back, provided that the contract is subject to finance and that they have taken reasonable steps to obtain approval. That second qualification — reasonable steps — carries significant legal weight and is examined next.

The “Reasonable Steps” Obligation

The standard REIQ contract clause does not simply give a buyer a no-questions-asked exit if finance falls through. The buyer is required to take all reasonable steps to obtain approval. This is not a formality. The unanimous decision of Hauff & Anor v Miller [2013] QCA 48 confirmed that where a buyer attempts to terminate a contract on the grounds of failure to obtain finance, evidence must be provided that all reasonable steps were taken to secure finance by the finance date. The Court found that a failure to take such reasonable steps amounts to a breach of contract and activates the seller’s right to affirm or terminate the contract.

The facts of that case are instructive for every Queensland agent. On 3 September 2010, the parties entered into an REIQ contract for the sale of a residential lot under community titles schemes. The contract was subject to the buyer obtaining finance in the amount of $400,000 from the nominated financier, ING Bank, by 10 September 2010. The buyer was required to take all reasonable steps to obtain approval. The buyer did not apply to the nominated financier (ING) and instead applied to The Rock Building Society, on the presumption that an application would be more likely to be successful within time.

The Court held that she had not taken all reasonable steps to obtain finance by her failure to apply for finance with the banking institution nominated on the contract. Accordingly, the sellers retained the buyer’s deposit and the buyer was liable for damages and costs of the proceedings.

This outcome — deposit forfeited plus damages — is not a remote possibility. Failing to comply strictly with the subject-to-finance clause can result in losing the deposit and potentially facing damages for breach of contract. In some cases, those damages could be hundreds of thousands of dollars.

Conditional Versus Unconditional: Notifying the Seller

A second failure point that catches buyers — and therefore agents — is the notification step after finance is approved. Bank approval alone does not make the contract unconditional. If the buyer is happy to proceed, they must notify their solicitor in writing that they are satisfied with their financing. It is not enough to simply be approved by the bank — the property contract has its own conditions with due dates that need to be manually satisfied.

Once notice of finance approval is given to the seller under the contract, it cannot be withdrawn. This is a point agents should communicate clearly to buyers before they instruct their solicitor to issue the notice. Buyers should be careful before they advise that finance approval has been obtained. They should carefully consider the terms of the offer of finance to ensure it is what they need and what they applied for. For example, an approval subject to valuation or on normal bank terms is not an unconditional approval contemplated by the contract.

Once a buyer advises that approval has been given, they may be in difficulties if the lender does not proceed with the loan. In these circumstances, a buyer could lose their deposit or be sued for any loss incurred by the seller beyond the extent of the forfeited deposit.

Common Mistakes in Finance Condition Queensland Contracts

Drafting Errors That Void the Clause

The most consequential drafting error is leaving the Reference Schedule incomplete. In Queensland, to make your contract subject to finance, a finance amount, financier, and finance date must all be sufficiently met to execute a contract. An agent who presents a contract with any of these fields blank — even inadvertently — has potentially left the buyer without protection they believe they have.

A secondary drafting issue is imprecise language around the finance date and approval date. The Court’s decision in Habi Pty Ltd v Global Group Enterprises Pty Ltd highlights the importance of using precise language when specifying the date for finance approval and settlement. The dispute arose as a result of careless drafting and ultimately caused the parties to become confused as to whether the finance approval date was the date the buyer received approval notification or the actual date of approval. In Queensland real estate contracts, precision in dates is not a pedantic detail — it determines legal rights.

Setting a Finance Date That Sets the Buyer Up to Fail

Agents sometimes insert an artificially short finance date to make an offer appear more attractive to the seller. This approach creates downstream risk. A lender’s processing timeline does not respond to contract pressure. Every so often a buyer’s broker will note that an agent who is selling a property has recommended a short finance date on the offer as it will “hurry the bank up”. Banks aren’t running any race and so the main person who will be feeling stressed with a short finance period is the buyer.

If the contract is dependent on finance, the finance section of the contract should specify a deadline for meeting the financial requirement, usually within 14 or 21 days after all parties sign the contract. In more complex lending scenarios — non-resident buyers, self-employed borrowers, high-density properties, or purchases requiring specialist valuations — 21 days may not be sufficient. Where the timeline is genuinely tight, agents should counsel buyers to request an extension early rather than waiting until the day before the deadline.

Extensions: Agreement Is Never Guaranteed

Sellers are not required by law to grant an extension for the finance clause in Queensland. Extensions must be negotiated and agreed upon in writing by both parties. A seller who receives a request for a finance extension has every right to decline. This is particularly relevant in rising markets where a seller who suspects the buyer is using the finance clause to exit may calculate that refusing an extension, allowing the contract to lapse, and relisting is commercially preferable.

Agents managing this negotiation — whether for buyer or seller — should handle extension requests in writing, with clear new deadline language, and ensure both parties confirm agreement before the existing finance date expires.

The Irrevocability Problem

Most financial institutions will reserve the right to withdraw finance approval at any time prior to settlement for any number of reasons. It is important that buyers consider very carefully any conditions attaching to a finance approval and their ability to satisfy all requirements relevant to the advance of funds before giving any notice about finance under the contract.

This creates a genuine trap for buyers — and for agents advising them informally. A buyer who notifies the seller that finance is approved, and then discovers their lender has subsequently withdrawn approval due to a change in circumstances (job loss, a valuation shortfall, a material change in the buyer’s financial position), is locked into the contract. They cannot use the finance condition to exit. The contract is unconditional on finance, and the buyer’s only paths forward are to find alternative funding, negotiate a termination by agreement, or default.

What Queensland Agents Need to Know About Finance Condition

Your Role Stops at Information, Not Advice

As a licensed Queensland real estate agent, your obligations under the Property Occupations Act 2014 (Qld) include acting honestly and in good faith, and not making false or misleading representations. They do not extend to advising buyers or sellers on the legal implications of contract terms. The finance condition is a clause with significant legal consequences, and any agent who crosses the line from explaining mechanics to giving legal or financial advice creates personal liability.

What you can and should do is ensure that the Reference Schedule is complete and accurate when the contract is prepared, flag to buyers that they need to engage a solicitor to review the contract promptly, communicate finance deadline dates clearly to all parties, and escalate extension requests to the relevant solicitors rather than managing them informally.

The 19th Edition Contract: Confirm You Are Using the Current Form

On 7 June 2024, Queensland Law Society and the Real Estate Institute of Queensland (REIQ) prepared new editions of the two residential sale of land contracts. The new editions reflect amendments to the Residential Tenancies and Rooming Accommodation Act 2008. The current standard form for houses and residential land is the Nineteenth Edition. Using an outdated contract edition creates risk, particularly where changes affect disclosure obligations or standard clause numbering.

The Wider Disclosure Context: Property Law Act 2023

Finance conditions do not exist in isolation. Queensland’s new Property Law Act 2023 introduces updated rules for property transactions, disclosure obligations, and ownership across the state, commencing on 1 August 2025, replacing legislation in place since 1974. This long-awaited reform aims to modernise the state’s approach to property dealings and is expected to bring greater clarity to all parties involved with a property exchange.

The new seller disclosure scheme in the Property Law Act 2023 began on 1 August, marking one of the most significant shifts to Queensland’s property law landscape in decades. Under the new laws, a seller must provide key disclosure information and documents to a buyer before the buyer signs a contract for sale. The interplay between these new pre-contractual disclosure obligations and conditions like the finance clause — particularly around timing and the buyer’s right to terminate — is an evolving area. Agents should ensure their principals and buyers obtain legal advice that reflects these current requirements.

Auction Contracts and the Finance Condition Trap

Properties sold under the hammer at auction in Queensland are typically sold unconditionally. The cooling-off period does not apply to properties sold at auction, and the contract executed on the day carries no finance condition unless specifically negotiated in advance. A buyer who attends an auction expecting to introduce a finance condition after the fall of the hammer will find that position untenable. Agents managing auction campaigns should make this unambiguously clear to all registered bidders before auction day.

What the Agent Owes the Seller During the Finance Period

While the finance condition is primarily protective of the buyer, agents acting for the seller have their own obligations during the conditional period. The seller cannot act in ways that would destroy the buyer’s ability to complete the transaction. Equally, the agent should monitor deadline dates and ensure the seller is ready to act if a termination notice is received — including contacting their solicitor promptly to assess whether the termination is validly made and whether the “reasonable steps” question should be investigated before the deposit is released.

Sellers might doubt the genuineness of a buyer who terminates the contract for not obtaining finance by the finance date. They may suspect that the buyer is using the finance clause to back out of the deal and might question whether the buyer truly complied with the subject-to-finance condition, particularly whether they took all reasonable steps to secure finance. This suspicion is legally actionable. A seller whose solicitor requests evidence of reasonable steps, and receives none, may have grounds to retain the deposit.

What This Means for Queensland Agents

The finance condition is one of the most frequently encountered clauses in Queensland residential contracts and, proportionally, one of the most frequently mismanaged. The core principles for agents at any career stage are these.

First, the finance condition is only active if all three Reference Schedule fields — finance amount, financier, and finance date — are properly completed. A blank field means no condition exists, regardless of what the parties believed when they signed.

Second, the buyer’s right to terminate is not unconditional. The obligation to take all reasonable steps to obtain finance from the nominated financier is real, judicially tested, and carries serious consequences when ignored. Hauff & Anor v Miller [2013] QCA 48 remains the definitive Queensland Court of Appeal authority on this point.

Third, bank approval does not automatically satisfy the finance condition. The buyer must notify the seller in writing through their solicitor, and that notification, once given, is irrevocable.

Fourth, extension requests require written agreement from both parties. A verbal indication from a selling agent that the seller “should be fine” with an extension is not an extension. Sellers are under no legal obligation to grant one.

Fifth, under the Property Law Act 2023 (commencing 1 August 2025), Queensland’s property transaction framework has undergone its most significant reform in fifty years. Finance conditions operate within a broader contract framework that is changing, and agents who are not keeping pace with those changes should be seeking current guidance from the REIQ or qualified property solicitors.

The finance condition exists to protect buyers who need credit to complete a purchase. When it is properly drafted, properly activated, and properly managed, it does that job cleanly. When any part of the process is careless — a blank field, a late notice, an application to the wrong lender, a premature satisfaction notice — the protection evaporates and the exposure begins.