With a standard REIQ contract, if the finance period runs out and there has been no "approval" or "decline" then:

            Q1       is the contract automatically unconditional as to finance ?

            Q2       if not ... then can the seller terminate at any time up to settlement ?

            -and-

            Q3       Is there a better alternative to the REIQ contract ?   

Q1 - is the contract automatically unconditional ?

The answer is a very simple "No!".

The finance clause in the standard contract does not work the same way as the building inspection clause.

When the finance period runs out, and the Buyer hasn't yet notified approval or decline, then there are several possibilities with the three most common being:

(a)       The Seller can cancel

            The Seller does not have to wait around for the Buyer - the Seller can cancel the contract.

            However - the Seller cannot cancel after the Seller has been advised that the Buyer has finance approval.

(b)       The Buyer can notify finance approval

            The Buyer can still notify finance approval after the finance period expires.

            As long as the contract is still in force, this notification will bind both Seller and Buyer to the contract.

(c)       The Buyer can cancel

            If the Buyer hasn't already notified finance approval, then the Buyer can give notice that they have been unsuccessful with their efforts at obtaining finance.

Q2 - can the Seller cancel at any time up to settlement ?

In the answer described above, it is shown that a Seller can cancel if notice of finance approval hasn't been received.  This cancellation can be at any time up to settlement.

Is this fair on Buyers ?

The only buyers that can complain are those that have not notified finance approval.    Therefore, these buyers have brought this on themselves.

Q3 - Is there a better alternative to the REIQ contract ?

It is sometimes suggested that the finance clause be re-written to be more like the building inspection clause. The idea is ... that if the period runs out and the buyer has done nothing, then the contract is "deemed" to be unconditional as to finance.

This causes two real problems:

(1)       If the buyer does not in fact have finance approval then the Buyer will not be able to settle.  No special condition will change this.  If the Buyer loses a significant deposit, then the Buyer may be able to bring a Court action that the unusual deposit clause was not sufficiently explained to them before (or after) the contract was signed.

(2)       With such a clause, the Seller may be forced to wait until the original settlement date before they can cancel the contract.  This wastes time, when the Seller should in reality be marketing the property for re-sale.