A memorandum of sale is a document written by an estate agent, auctioneer or home-buying company after an initial sale is agreed on a property.
It is at this stage a property moves from being under offer to sold, ‘subject to contract’ and the conveyancing process begins.
It is usually created in just a few days following the initial acceptance of the buyers offer. However, it can take longer if the buyer or seller struggle to find any of the relevant information. The memorandum of sale is sent to both parties’ solicitors.
The memorandum or memo of sale contains all the key information relating to the property sale. This will include the buyers and sellers contact information, as well as information about the property. It will also confirm the price both parties have agreed as a fair value for the property.
The creation of a memorandum of sale is the first step of a longer process involved in selling and buying a house, flat or bungalow.
Why is a memorandum of sale important?
A memorandum of sale is important because it enables all the key information relating to a property sale to be kept in one place.
This makes the process of selling a house or flat much more efficient, as solicitors do not need to waste time gathering and confirming individual bits of information.
Once an estate agent has written up the memorandum of sale, they should circulate it as quickly as possible. This means the conveyancing process can proceed without delay.
On top of this, the memorandum of sale also serves as evidence that the sale has been agreed.
A memo of sale can also help prevent disputes between the seller and the buyer, as it helps make both aware of the details of the transaction.
Sometimes the buyer or seller cannot see the memorandum of sale themselves due to data protection regulations.
This is not a cause for worry however, as both the buyers’ and sellers’ solicitors have access to the memorandum and will reveal and help deal with any important issues that arise from it.
Is a memorandum of sale legally binding?
A memorandum of sale is not legally binding.
It is a preliminary contract that states the terms of the agreement before both parties legally commit to them.
This means that you are not obligated to buy or sell. Both parties are only legally bound following the exchange of contracts.
This leaves sellers vulnerable to a tactic called Gazundering, and buyers vulnerable to Gazumping until contracts are exchanged.
What is usually included in a memorandum of sale?
All the key information relating to a property sale tends to be included in a memorandum of sale.
- This will almost always include
- The properties’ full address
- The properties’ agreed price
- How much of a deposit will be paid
- Confirmation if the buyer will be paying for the property in cash, or securing finance through means such as a mortgage
- The relevant HM Land Registry number
- Confirmation of ownership (via HM Land Registry)
- The name, contact details and address of the buyer, the seller and both of their conveyancing solicitors
- What fixtures, fittings and furniture will be included in the sale
- If the property is a leasehold or freehold, and in the case of a leasehold how long is left remaining on the lease
- Expected exchange and completion dates
It can also include
- The names and contact details of any mortgage brokers who are involved in the sale
- The name of any mortgage lenders involved, if a decision in principle is in place, and if so, how much for
- Any special conditions relating to the sale, for example, having certain repair work done
- Any legal issues that need investigation, for example, planning restrictions or rights of way
A memorandum of sale must also be accompanied by a valid energy performance certificate (EPC) as this document is legally required to sell a property.
How do memorandums of sale work when you sell your property at auction?
When selling your property at auction the process works differently.
This is because when the auctioneers hammer falls you are placed into a legally binding contract and have committed to the sale/purchase.
A memorandum of sale is then immediately completed and issued, while the deposit and auction house fees are paid.
The document is then to be forwarded to both parties’ solicitors.
Online auction houses have a similar process.
How long does it take for this to be issued?
The UK Government website states that it normally takes between two and three months to sell a home. This is measured from the issuing of the memorandum of sale to the date of completion.
However, many things can cause delays in this process, including property chains breaking and leaving everyone in the lurch, surveys revealing complicated repair jobs, solicitors being slow with conveyancing, or buyers having trouble securing their finance.
If you want to sell your house quickly, you should consider contacting a property buying company. These companies quickly make up a memorandum of sale and can move to exchange contracts far faster than a traditional buyer.
If you would like to learn more about how fast your property could sell, please contact one of our expert team at National Property Buyers.
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