Subject to Loan Clause

Builders | Banks | Receivers | (Subject to loan clause)

Numerous articles have appeared in the Irish press recently regarding the difficulty buyers have in relation to entering into a Contract to purchase a house and inserting the standard Condition that the Contract is Subject to Loan.  Many builders are refusing to allow this Condition to be inserted though same is recommended by the Law Society and by any prudent Solicitor acting for a Purchaser.  Without this Condition the Purchaser is at risk of losing their deposit should the loan cheque not issue from the Bank or Lending Institution.

The Banks may be partially responsible for this situation in that:
They are probably reluctant to give builders finance without binding unconditional Contracts (without Loan Conditions).
The Banks granting loan approvals to Purchasers, limit the period within which a loan can be drawn down and further, if the loan is not drawn down within three months of approval issuing, require up-to-date valuations of the property.

The Banks could alleviate this situation by realizing the obvious, in that property values continue to rise and therefore even if the builders do not have binding Contracts, they can probably sell on the relevant properties at higher prices and further, the Banks could extend the life of loan approval for Purchasers and certainly extend the valuation period.subject to loan clause

In relation to receivers, many Purchasers find that although their Solicitors ask the standard pre-Contract and prudent queries, the receivers decline to give any adequate responses on the basis that they are not in possession of the property, which means in effect, that the Solicitors are virtually wasting their time in making any queries and notwithstanding the advice of prudent Solicitors, the Purchaser is really in a situation of “Buyers Beware” and without any adequate remedy against receivers.

It is a totally unsatisfactory situation which should be remedied by legislation, as should the Subject to Loan clause position of Contracts. Builders and receivers are not swayed by recommendations of the Law Society or any other relevant bodies.

For further information on this or any other matter, please contact our office on 01-4540068 or email [email protected] for an appointment.

John Gaynor
John Gaynor & Co.
42-46 Thomas Street
Dublin 8