Use your best endeavours to get finance

If you’re a buyer and you made your offer subject to you obtaining finance approval from a bank or lending institution, there’s a few things you should know.

The Real Estate Institute of Western Australia (REIWA) publishes a standard Contract for the Sale of Land or Strata title by Offer and Acceptance. It set out what you can – and can’t – do when your contract is subject to finance approval.

The finance condition requires buyers to immediately apply for finance approval after the offer is accepted, and to use ‘all best endeavours in good faith’ to obtain finance approval. The buyer is also required to keep the seller updated on the approval process and provide notice once finance is either approved or not approved.

What does this mean?

In short, using ‘all best endeavours in good faith’ means you must do everything you possibly can to make sure your lender issues your finance approval before the due date. That includes following up your lender if they are dragging their feet! It’s a poor excuse to say that your bank took too long or made a mistake- especially if you could have sped the process up.

If you’re the buyer, your first port of call once your offer is accepted should be your bank.

If you need to apply for finance, do it immediately. Make sure you have the supporting documentation ready. Depending on your bank’s requirements, you may need to provide letters from employers, payslips, and tax returns. If you’re self-employed, you’ll probably have to provide even more information.

Other documents and information your lender may need may include a certificate of currency for insurance, a copy of the sale contract, a valuation of the property, and your identity documents. You should make sure you give these to your lender as soon as possible or make it possible for your lender to obtain them from other parties.

If you’ve already got pre-approval for your loan, good- but you still need to do more. Your finance approval is only official once it’s either unconditional, or only conditional on the bank’s usual terms and conditions. Generally, the letter from your bank offering finance will state whether it is pre-approval, approval subject to usual conditions, or unconditional approval.

The consequences

If you don’t use ‘all best endeavours in good faith’ – if you don’t apply for finance, if you apply for finance too late, if you’re slow in providing information to your lender, or if you apply for finance approval for a higher amount or from a different lender than set out in the contract- your contract might be terminated by the seller. The seller can also sue you for breaching the contract.


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