Whether you are buying or selling a house, you will encounter a variety of terminology. Some are easy to understand, and some are a little more complex. Something important to be clear about is the “Memorandum of Sale.”
The memorandum of sale is a legal document and without it, the property transaction cannot be completed.
Read on to find out what is included in a memorandum of sale, how you obtain one and how you can stop a memorandum of sale from collapsing.
What is a memorandum of sale?
A memorandum of sale is a legal document that records all the details relating to the sale of a property. It is used to show that a sale has been agreed upon between the buyer and seller subject to contracts being agreed. When completing a memorandum of sale, it is important to include as much information as possible.
Commonly a memorandum of sale will include the following:
- The property address
- The final agreed price of the property
- Names and contact details for both buyer and seller (this should include address, email and phone number)
- Contact details for both sets of solicitors
- Whether the property is leasehold or freehold
- Details of any deposit or fees
- Ownership confirmation from the Land Registry as well as land registration number
- The Energy Performance Certificate (EPC)
- An estimated timescale for full completion
- Mortgage provider information (where needed)
- Any information relating to a property chain involving buyer or seller after the purchase has been completed.
- Details relating to any furnishings that will be included or excluded from the sale. This can also apply to fixtures and fittings
- Additional information that you think may aid either party with the completion of the sale
You will find that some memorandums of sale may not include all this information, whilst others include this and more. If you have any doubts, it is always recommended that you speak to a solicitor to get a full understanding of the memorandum of the sale in front of you.
Whilst the memorandum of sale is a legal document and must be complete for the transaction to progress, it is not officially legally binding.
When is a memorandum of sale issued?
A memorandum of sale will only be issued once an offer is made and accepted. Once this stage has been reached, a memorandum of sale can be issued relatively fast, but can also take considerable time if the correct information has not been provided. It has been known to see a memorandum of sale issued in as little as 24 hours, but there are also cases where people have waited as long as 3 months.
Upon issuing a memorandum of sale, the process for completing the sale can begin. Once issued, though, a sale is still not guaranteed. Whilst the MOS provides the framework of a sale, it will also be used during the surveying process and if severe issues are picked up, the sale could collapse.
Common delays on the issuing of a memorandum of sale tend to be around incomplete documents or documents that are missing altogether. Using our list above should mean that the process can be completed quickly and smoothly.
Other delays can be deliberate, and it has been known for a seller to hold back whilst they wait for more viewings and potentially a better offer. This can be risky, as the better offer may not appear, and the original buyer may pull out due to the delay.
Who will issue the memorandum of sale?
The memorandum of sale is issued by the estate agent once the offer has been accepted on the property. The information provided by the seller will be given to the estate agent who will proceed to have the document drawn up. The solicitors involved in the procedure will sign off on it once all is agreed. In many circumstances, you will not see the actual document itself due to the nature of the confidential data it contains.
Can changes be made to a memorandum of sale?
Due to the fact a memorandum of sale is not legally binding, it can be constantly altered if necessary. Either party can request changes and should either side not agree with the proposed changes, they can walk away from the transaction without any repercussions.
What happens once a memorandum of sale is issued?
Once the memorandum of sale has been issued, the property moves into the stage known as STC (subject to contract). This allows the conveyancing stage to begin as well as the surveying of the property. This is a vital stage during which any property inadequacies may be discovered.
In addition to the conveyancing and surveying, checks on the buyers themselves will take place. These would include such things as checks on ID and proof of funds. As long as the buyer has proof of funds in the form of a mortgage/agreement in principle, this stage can be completed fairly quickly. The mortgage offer should be no older than two months for it to still be applicable.
Why is a memorandum of sale needed?
Put simply, without one, you are not going to be completing your property transaction. The memorandum of sale acts as a combined source of all the relevant information that will be required by solicitors, mortgage lenders and any other parties involved in the property sale.
With it supplying all of the relevant information prior to contracts and surveys taking place, the memorandum of sale aids a quick and smooth sale.
Can I still sell my house without a memorandum of sale?
No – you will need a memorandum of sale to sell your house. Whilst not legally binding due to the fact either side could pull out of the sale, it does provide both parties with the information needed for the transaction to progress.
What is a notification of sale?
You may also hear this term when a memorandum of sale is being completed. They are both the same thing and will contain the same information. One thing not to be confused with is the notice of sale document. This acts as the legal document a mortgage lender sends the borrower as part of the mortgage agreement.
Can anything go wrong with a memorandum of sale?
As mentioned on our checklist, any information relating to a property chain should be included on the memorandum of sale and it is here that problems sometimes occur. If one link in the chain breaks, the rest of the chain starts to fall apart. So, whilst your memorandum will be fully agreed upon and ready to go, if another property transaction in the property chain collapses, your sale will fall apart too.
Because we buy any home, the fear of a chain break is removed.
A further issue, and one we touched upon earlier, is time. If a memorandum of sale has been agreed and the transaction moves into the completion stages, any delays may lead a party to pulling out of the deal altogether. Completing as quickly as possible is of benefit to all sides. Ensuring your memorandum of sale covers everything will help make your sale smoother. Delays could see either a total collapse of the sale, or the buyer trying to negotiate a lower price. Working with a sell house fast model like ours helps you avoid that risk.
Why might a memorandum of sale not be completed?
In addition to the two reasons mentioned above, there is a chance that neither of those becomes an issue and it could in fact be due to something else. Commonly, faults with completing a memorandum of sale tend to revolve around the following:
- Delays in completing the document
- Property defects established during a RICS survey
- Insufficient funds despite an agreed amount being submitted
- Falling out between buying and selling parties
- Seller was offered more money elsewhere or had change of heart
- Expired mortgage offer
If you want to complete quickly, ensuring you have all the required documentation ready in advance is a huge advantage. Staying fully transparent and honest also helps, as it instils confidence in the potential buyer.
What steps can I take to ensure my memorandum of sale is completed?
This is an important step in the process of selling your house and whilst making sure you have all the correct information to hand goes some way to getting the memorandum of sale issued faster. There are a few other things you can do in order to ensure it doesn’t fall through:
- Do your research on the estate agents you may wish to deal with
- Ensure you get a realistic property valuation. Overpricing your house won’t help it sell
- Avoid property chains where you can. Cash house buyers can help with this
- Build good relationships with all involved – estate agents, solicitors and the other party
- Look into home buyers’ insurance
So, if you are looking to sell, we hope this guide to a memorandum of sale has helped clear up any questions you may have. Should it still be a little confusing, contact us for full support and guidance.
Should the process of selling via a traditional estate agent seem too stressful or you find yourself worrying about chain breaks, reach out to our team. We can provide you with a cash offer in minutes and can have your funds in as little as seven days. In fact, we can guarantee your house sale.