What does the ‘Solicitor's Approval’ clause mean in a contract?

A solicitor’s approval clause can consider the legal implications of an agreement for a client. But what clients often fail to realise is that the clause does not give lawyers broad powers to change any terms that are not suitable for the client’s situation, unless the wording of the clause specifically allows for this. Then why is this clause needed at all?

Director of GM Law, Gerard Pagliaro shares his thoughts on this matter:

1. Why is the ‘Solicitor’s Approval’ clause so often mentioned if it is ineffective?

When buying or selling property, market conditions often create pressure to sign agreements quickly, sometimes outside of regular business hours. At some point it became a regular practice to reduce the risk of a deal falling through by advising the client to include a solicitor’s approval clause in the agreement. The clause is put into the agreement, it is signed and the buyers trust that their conveyancing solicitor can look into it at some point and if there is anything the conveyancing solicitor doesn’t like then the buyers can end the agreement. But in practice the ‘Solicitor’s Approval’ clause does not give solicitors broad powers to change any terms that are not suitable for the client’s situation unless the clause is specifically worded to do so.

In other words, the reason the ‘Solicitor’s Approval’ clause is often mentioned is not because it is effective, but because psychologically it creates a sense that the contract can be renegotiated.

2. What is not renegotiable under the ‘Solicitor’s Approval’ clause?

If for some reason the contract seems financially unprofitable to you the ‘Solicitor’s Approval’ clause cannot usually be invoked to cancel an agreement without valid legal grounds. However, to state conclusively, what grounds a buyer has to terminate under this type of clause requires you to consider the specific wording of the clause. If the contract cannot be terminated under this clause, the purchase and sale agreement remain enforceable, even if there are issues or defects. You might be compelled by a court order to complete the transaction, or if the seller finds another buyer, you could be held responsible for damages and penalty interest related to the resale.

3. In what cases does the ‘Solicitor’s Approval’ clause allow the contract to be terminated?

This will depend entirely on the scope of the clause, but it shouldn’t be assumed that this type of clause gives the buyer broad scope to exit the contract without being in default.

4. When does it make sense to include a ‘Solicitor’s Approval’ clause in a contract?

A ‘Solicitor’s Approval’ clause is valuable for reviewing documents after signing a contract. There may be specific issues that the buyer has an interest in, which don’t give rise to any legal recourse under the contract. A solicitor’s clause will allow the buyer an opportunity to consult their lawyer and get comprehensive advice, after the lawyer has been able to properly consider the buyer’s personal circumstances. It is important though that the solicitor be contacted to check the drafting of the clause.

5. How often is the ‘Solicitor’s Approval’ clause used in GM Law practice?

In Gerard Pagliaro’s opinion, whilst these clauses may be useful in very limited circumstances, they are no substitute for receiving comprehensive advice from a solicitor prior to signing the contract. Only by doing this will the buyer or seller ensure that the contract in all respects meets their personal needs.

We service the entire Brisbane metropolitan area

If you need help to get a contract sorted so you can secure a property for your client, we have set up the GM Law agent hotline.

You can email us at AgentSupport@gmlaw.com.au to get urgent personalized support.

We service the entire Brisbane metropolitan area

If you need help to get a contract sorted so you can secure a property for your client, we have set up the GM Law agent hotline.

You can email us at AgentSupport@gmlaw.com.au to get urgent personalized support.

Don't forget we offer the following:

1. Why is the ‘Solicitor’s Approval’ clause so often mentioned if it is ineffective?

2. What is not renegotiable under the ‘Solicitor’s Approval’ clause?

3. In what cases does the ‘Solicitor’s Approval’ clause allow the contract to be terminated?

4. When does it make sense to include a ‘Solicitor’s Approval’ clause in a contract?

5. How often is the ‘Solicitor’s Approval’ clause used in GM Law practice?

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