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A family loses $320,000 home deposit.

A Victorian family had lost their entire $320,000 home deposit due to their finance being insufficient and could not complete the settlement.

In June 2019, the Gayed family with three young children under 12, found their “dream home” in Balwyn, Melbourne, 'a four-bedroom, four-bathroom 756-square-metre mansion for $3.2 million and were meant to settle on the property in December.'

They had used their life savings and equity from their home to get the 10% deposit, an amount of $320,000 for the Balwyn purchase.

Upon signing the contract, the couple noticed that the “subject to finance” clause have been removed from the contract. An important clause in the Victorian and Queensland standard contract. This clause gives the purchasers the legal right to opt out of the deal if their loan is not approved.

Unlike contracts in Queensland and Victoria which provides a “subject to finance” clause, the contracts in NSW are unconditional as to finance either immediately on exchange of contracts or on the expiry or waiver of the cooling-off period

Mr Gayed felt pressured to sign the contract as the 'real estate agent told him there were other potential buyers waiting in the wings.

Mr Gayed had put his household income into a loan calculator and assumed he would be eligible for the same type of loan he had used to purchase his first home, a 90% doctor’s scheme loan, which allows medical professionals to borrow up to 90% of the value of a home without having to pay lender’s mortgage insurance (LMI).

However, after the contract was signed, he got some bad news - the bank had a $2 million threshold for its doctor’s scheme. Instead of receiving 90% of the home loan from the bank, the Gayeds could only get 85%.

“At this moment, we became very stressed and sought every avenue to arrange the additional five percent,” he said.

The deal lapsed. The vendor was entitled to the $320,000 deposit under the contract.

To date, the vendors haven’t resold after Mr Gayed’s deal fell through.

Annabelle Feng, the RT Edgar real estate agent who made the sale told that she received a commission for the aborted sale and that it was the vendor’s idea to remove the “subject to finance” clause.

The Gayed family are currently renting a small house in Melbourne. They have no idea if they will ever manage to own a home in Melbourne after the setback. '


What happened to the Gayed family was very unfortunate, and unnecessary, as it could have been avoided if due diligence and care were taken from the outset.

Although not mentioned in the article, it appears that the Gayed family did not engage a solicitor conveyancer on the matter to review and advise on the contract and the effect of the removal of the 'subject to finance' clause.

Where there are possible issues that may arise throughout the sale/purchase process, it would be unwise not to engage a solicitor conveyancer who is responsible for the contract (to draft, review, advise and negotiate) and who conducts the entire conveyancing process from start to completion.

It also appears that Mr Gayed had organised his own finance without the assistance of a broker/finance provider to confirm the finance. The action of seeking alternative finance options when he discovered that they could only borrow 85% was done too little too late as time was of the essence to complete the transaction within the contractual timeframe.

Here are four tips to avoid this situation (not legal advice):

  1. Never sign a contract under pressure and/or by impulse. Real estate agents use sales tactics to pressure purchasers to commit to a purchase. Agents have no legal obligations to the purchaser and any representations from them cannot be relied upon unless recorded in the contract. In this case, the agent still received their commission from the deposit that the Gayed family had lost.

  2. Do not sign anything until you have thoroughly gone through the contract, obtained independent legal advice/legal representation, and have organised the finance.

  3. Engage a conveyancer solicitor that is independent of the agent and the vendor. Retain their services before dealing with an agent.

  4. Exercise the cooling-off period to allow time to attend to required reports and organise finance. In Victoria and Queensland, ensure that the 'subject to finance' clause is not removed from the contract.

For more than a decade, the principal lawyer of Odtojan Bryl Lawyers has undertaken property conveyancing matters. Odtojan Bryl Lawyers have provided dedicated legal services to promote and protect the interest of its clients.

Contact Odtojan Bryl Lawyers at for services in property conveyancing: sale, purchase, transfer or leases (commercial or retail), mortgages, reverse mortgages, and credit laws.



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