It is customary to submit a seven (7), fourteen (14) or twenty-one (21) day of the financing period from the date of signing the sales contract. Further funding extensions may be requested if funding is delayed in obtaining funding approval. If the seller of an extension is not identifiable, the sales contract may be terminated or the buyer may decide to act unconditionally without providing financing. Also remember that it is different from the application and non-receipt of the authorization to change your mind about the purchase and not to pursue the request for financing. You cannot use a financial clause to withdraw from a sale if you simply change your mind. It only protects you if your application for funding is refused. Recently, we have seen that banks, even after confirming unconditional financial approval, are still adding a COVID 19 condition to their credit documents that states that they can still cancel funding before the resolution due to the pandemic. This may mean that, unlike all pre-COVID-19 funding agreements, “unconditional funding” may not be as unconditional. It is quite common for buyers to make mistakes when they see if a contract has become unconditional, with disastrous consequences.
Remember, an unconditional contract means that the sale must continue. If the buyer is late in the contract because there is no financing available, the seller may have the right to compel the buyer to proceed or lose the entire buyer`s deposit and sue for damages. The only way to keep the bulk of your deposit is if you sign a sales contract containing this clause and inform lenders that you have not been able to obtain written financing authorization until the agreed timetable. All financial clauses impose an obligation to take all reasonable steps to obtain financing (including providing relevant information, signing documents, requesting, etc.). Real estate agents should never be allowed to prepare financing terms or advise a buyer on the financing condition, since the real estate agent`s involvement is often selfish and contrary to the buyer`s interests. Note that “pre-authorization” or “conditional authorization” does not mean that your loan has been approved. These conditions are only an indication to your financial institution that they are likely to authorize your financing after applying for a home loan if everything else is correct.