What does unconditional mean when buying a house?

Signing an agreement to buy a house doesn’t always lock you in straight away. Your offer can come with conditions. A condition is something that has to happen by a set date. If it doesn’t, you can get out of the deal.¹

Conditions protect you from the things you can’t be sure of when you sign. The common ones include your bank agreeing to lend you the money, and a building report you’re happy with. They also include the council’s report on the property and a test for drug contamination.¹

So what happens once every condition has been met, or given up? Unconditional describes an agreement with no conditions left to satisfy, whether it started that way or every condition has now been met. Once it’s unconditional, neither side can normally pull out just because they’ve changed their mind.

That’s the point of no return. When people say a sale has gone unconditional, they mean it’s as good as done. You have to buy, and the seller has to sell.²

Getting there is where buyers get caught out. A missed deadline can lose you a house you still want. And with one of the common conditions, staying quiet means you’ve accepted it.

Buying at auction, or with no conditions

If the house is going to auction, there’s no room for conditions. Every bid is unconditional. If yours wins, you’re committed to buying the house there and then.

So anything you’d want a condition for, you have to sort out before auction day. That means your finance, a building report and the council’s report. If you bid first and find a problem later, it’s too late.³

Auctions aren’t the only way to buy with no conditions. When a house isn’t going to auction, you can still make an offer with none at all. The agreement is then unconditional as soon as you’ve both signed it.²

How conditions work on the standard form

The Law Association and the Real Estate Institute publish one widely used form. That’s the one we mean by “the standard form”. Yours may be on a different form, or someone may have changed it, so ask your lawyer which you have.

The standard form’s front page has a box for conditions. You tick yes or no for finance, a building report and the council’s report, among others, and write in a date for each. Each one then has its own clause in the small print, saying how it works.

Everything that happens to a condition happens by notice. A notice is a formal message in writing, and an email will do. You or your lawyer send it to the other side or to their lawyer.¹

That matters because a condition that isn’t met doesn’t end the deal on its own. Once its date has passed, either of you can end the agreement by giving notice, and you get back what you’ve paid. So if you want to walk away, you have to say so.¹

What you get back includes the deposit, a sum of money, agreed as part of the price, that you pay upfront to secure the sale. If you pay it to the agent, they must usually hold it for 10 working days before paying it to anyone. If the deal falls through, you’re usually entitled to it back when a condition isn’t met. You’re not entitled to it back just because you’ve changed your mind.⁴

You pay it to the seller or to the seller’s real estate agent. If it goes to the agent, it sits in a separate account at the agency, and the seller can’t touch it for at least 10 working days.²

On the standard form, you pay it as soon as you’ve both signed, unless the agreement sets another time. Whoever holds it has to keep hold of it until you’ve met or given up every condition. It isn’t the seller’s money to spend while the deal could still fall through.¹

Finance, building report and the council’s report

The standard form treats these three conditions differently. Get them mixed up, and they can catch you out in opposite ways.

Finance and building report: you have to say yes. Neither counts as met until a notice saying so goes to the other side. If the date passes with no notice, the condition hasn’t been met, and either of you can end the agreement.¹

The danger is losing a house you wanted, just because nobody sent the notice in time. So ask your lawyer who will send it, and how soon before the date they’ll need to hear from you.

The council’s report: you have to say no. A LIM is a report you can buy from the council about a property. It sets out what the council knows: flooding and other hazards, the drains, rates owing, and its records of work done there.

With the LIM, it’s the other way round. If you don’t object by the LIM date, the agreement treats you as having approved it, whatever it says.¹ The danger here is the opposite one. You could end up owning a house with a problem you never raised, because you didn’t read the LIM in time.

To object, you send the seller a notice by the LIM date. You need reasonable grounds, and you have to say what’s wrong and what you want done about it. If the seller agrees to fix it, the condition counts as met, and the sale goes ahead.¹ If the seller won’t, your lawyer can tell you what happens next.

Can another buyer take the house while you wait?

Not while you’re on time. On the standard form, the seller can’t end the deal before a condition’s date. Once the date has passed with the condition still not met, the seller can end it by notice.¹ If a better offer has come in by then, you can lose the house to it.

Some agreements add a cash-out clause, usually at the seller’s request. It lets the seller look at other offers while yours is waiting on a condition. The Real Estate Authority tells agents they don’t have to tell you when one comes in.⁵

The same guidance for agents is clear that even then, the seller can’t simply drop you for a better offer. You get the chance to go unconditional first. If you do, the house is yours, and the other buyer misses out.

Going unconditional early means giving up the conditions you’re still waiting on. You can give up a finance condition, or any other condition that’s there only for your benefit, by sending a notice.¹ But then you’re buying without the finance or the report you were waiting for.

Can you use a condition to back out if you change your mind?

No. A condition protects you from the thing it’s about, and nothing else. On the standard form, you have to do what you reasonably can to meet your own conditions.

If you end the deal because your finance fell through, the seller can ask what you did to get it. You then have to explain the steps you took straight away, with evidence to back it up, such as what your bank told you.¹

The building report gets checked the same way, through the report itself. If you end the deal over it, the seller can ask for a copy. A properly qualified building inspector has to write it in good faith. And the house has to fall short on a fair view, not just in your eyes.¹

So if you’ve gone off the house, a bad report from a builder mate won’t get you out.

Once it’s unconditional

From then on, you have to pay the rest of the price on the day the agreement sets. It doesn’t matter why the money doesn’t arrive. A hold-up at your bank still counts against you. If you still can’t pay after a final deadline, the seller can cancel the agreement and keep your deposit, up to 10% of the price.

The seller can also sue you for its losses, and those can come to far more than the deposit.¹ Our guide to what happens if you can’t settle on time covers the deadlines, the interest and what the seller can claim.

Other pages that may help

If a building report is one of your conditions, the builders report page covers what to check in the wording. What it costs to check a house covers the LIM and the other costs before you commit. If you haven’t chosen someone to act for you yet, see do you need a lawyer.

What to ask your lawyer

1. Is my agreement on the standard form, and has anything in it been changed?
2. Who sends the notice that a condition has been met, and how long before the date will you need to hear from me?
3. If I say nothing by my LIM date, does my agreement treat the LIM as approved?
4. When is my deposit due: when I sign, or when the agreement goes unconditional?
5. Does my agreement have a cash-out clause, and how long would I get to go unconditional?

Say these as they are written. They are normal questions to ask.

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