If you’re buying or selling a property, you may have come across the term ‘memorandum of sale’ but not know what it means. Whether you’re buying a new home or looking to sell your house online, a memorandum of sale is a vital document that you’ll encounter that is required for the sale to go through quickly and efficiently. The property sale will not be completed without it.
It can be a complex term, but below is everything you need to know about a memorandum of sale.
What is a memorandum of sale?
A memorandum of sale is a legal document that records the details of a sale of a property. It is used to record that the sale of a property has been agreed between buyer and seller subject to contract. It will contain as much relevant information as possible, including:
- The address of the property
- The agreed sale price
- The names and contact details of the seller and buyer
- Contact details of the solicitors representing the seller and buyer
- The HMRC Land Registry number
- Expected dates for exchange and completion
- Information about the property, such as whether it is a freehold or leasehold
- Any special conditions agreed as part of the same, for example, a sale at a specified price subject to certain repairs being made
A memorandum of sale acts as written evidence that an offer has been accepted, as well as recording the amount of money that will be paid. It is a contract but it’s not legally binding. It’s a preliminary measure to set out the terms of agreement before parties have to legally commit. However, it is still an important document. As soon as it is issued, the necessary arrangements to complete the sale of the property can be made. It also plays a vital part in the later surveying of the property because it contains so many details about the house. This could include things like subsidence, a major factor that can determine whether a sale actually goes through.
Who issues the memorandum of sale?
The memorandum of sale will be issued by the estate agent and is usually completed within just a few days but can take longer if certain parts of information are missing. It is highly advised that both the buying and selling parties have all documents prepared beforehand. It is unlikely that you will be able to see a copy as it contains confidential information about both the buyer and seller which are data protected. The memorandum of sale will be signed by the solicitors – at SOLD.CO.UK, we take care of all these arrangements for you.
When is a memorandum of sale issued?
The memorandum of sale will be drafted as soon as an offer is made and accepted. It will then be circulated, usually by email but sometimes by post. As the document is not legally binding, changes can still be made if there are further negotiations.
There is no set timescale for the memorandum of sale to be issued once an offer has been accepted – it can take anywhere from 24 hours to over a week. It will all depend on how quickly the relevant information can be obtained, although the seller should already have a lot of the details about the property itself. Delays in issuing the memorandum of sale can sometimes be caused by acquiring information from the buyer, such as the details of funds and solicitor contact details.
How long does it take from a memorandum of sale being issued to completion?
The average property sale through an estate agent takes 2-3 months, however, sales will be dependent on the requirements of both the seller and the buyer. Whilst every sale will be different, SOLD.co.uk uses a carefully cultivated network of solicitors and mortgage brokers to streamline the process.
What happens after a memorandum of sale is sent?
A memorandum of sale is the very first step of the property selling process. Once it has been issued, the property listing will be changed to ‘under offer’ or ‘sold subject to contract’ (STC). The conveyancing process will then begin to transfer the title of the property. The surveying will start, with the relevant forms for fixtures and fittings and property information being completed. Buyer checks will also take place, including checks on ID and proof of funds from the buyer. The proof of funds will usually be a mortgage offer within the last two months and occasionally proof of deposit. You might see these referred to as a DIP (decision in principle) or AIP (agreement in principle).
The types of memorandum of sale
Depending on how the sale is proceeding will determine which type of memorandum of sale process is followed.
If selling your house quickly through someone like SOLD.CO.UK you can expect the memorandum of sale to be completed very quickly. In cases where repossessed properties are involved, it can take as little as 24hours.
If selling via an auction house, once the hammer has been bought down, the contracts are effectively exchanged. The memorandum of sale is then expected to be completed immediately as well as paying the deposit and auction house fees. All checks are then completed and the documents sent to solicitors
What can go wrong with a memorandum of sale?
Most problems that occur after the memorandum of sale has been issued will be related to matters within the property chain. A lot of the time, the seller or buyer’s transaction is dependent on another property sale. If that sale falls through, perhaps due to someone changing their mind on the property, then the rest of the chain will also fall apart. SOLD.CO.UK can provide chain-free house sales, so you won’t have to worry about any links breaking and affecting the sale of your property when you sell with us.
Another issue that can happen after the memorandum of sale has been issued is to do with the time frame. The longer it takes to complete on a sale, the higher the risk that the buyer or seller may try to renegotiate on the price, or back out of the sale completely. Communicating efficiently with your solicitors and estate agents at all points in the sales process should reduce the time it takes to complete. At SOLD.CO.UK, our sales process is expertly streamlined to minimise the time to completion, so you can enjoy a fast sale with an online estate agent who can sell your house for free.