Whether buying or selling, you will have come across the term ‘Memorandum of sale’, but you might not know what it means.
A Memorandum of sale is an important legal document required by the buyer and the seller’s solicitors as it outlines the terms of a property transaction. It is used to record an agreed sale between a willing buyer and seller subject to the contract. It will contain as much useful information as possible, including:
- The full address of the property
- The agreed sale price
- Name and contact details of both buyer and seller
- Contact details of solicitors acting for each party
- HMRC Land Registry Title number
- Anticipated dates for exchange and completion
- Whether a property is leasehold or freehold
- Any special conditions agreed, including any repairs to be made by the seller prior to the exchange of contracts
A memorandum of sale provides written evidence that an offer has been accepted. It is an agreement that is not legally binding. It outlines the terms of the agreement before both parties instruct solicitors. It is an important document as it gives solicitors basic terms of reference. It also plays an essential role, particularly if a property needs work or has existing structural issues such as subsidence.
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Who issues the memorandum of sale?
Estate agent issues if the property is being sold on the open market. It is normally issued immediately or a few days after the sale as soon as negotiations are concluded, as it might be that the buyer wants the seller’s spice rack or to sell the property with certain fixtures and fittings included within the agreed price.
It is a good practice to get both the buyer’s and seller’s solicitor to sign the documents or at least ensure that they are included in the email when it is issued.
When is a memorandum of sale issued?
As soon as an offer has been accepted and both the buyer and the seller have provided their solicitors’ details, then a memorandum of sale is issued. It is important to remember that a memorandum of sale can be amended if there are further negotiations between both parties.
While there is no set timescale for issuing a memorandum of sale, it is normally issued within a week or quicker. Delays can incur if the buyer has not provided proof of funds and solicitors’ contact details aren’t provided.
How long does it take from a memorandum of sale being issued to completion?
If all goes well, the average time for a property sale can take between 2-3 months and sometimes a little longer, depending on the buyer’s or seller’s circumstances.
Property Saviour offer cash for a property and aim to complete a purchase within 2-3 weeks.
What happens after a memorandum of sale is sent?
A memorandum of sale is the first step after accepting an offer. Once issued, the property will be put to ‘under offer’ or ‘sold subject to contract’. The solicitors will start the conveyancing process.
The seller’s solicitor prepares a legal pack, which includes fixtures & fittings and property information forms, a copy of the title plan, land registry title register, EPC, and relevant warranties. This legal pack also referred to as ‘contract pack’ is then sent to the buyer’s solicitor.
Buyer checks are conducted by the estate agent which includes checking their ID documents, proof of funds and a copy of the mortgage offer. This could be in the form of a Decision in Principle (DIP) or agreement in principle (AIP).
Be aware not all estate agents will carry out these checks, leaving you vulnerable to the risk of buyers not being in a proceedable position, wasting months and costing you in additional payments for mortgage, council tax and abortive legal fees.
In the interim, the buyer should be:
- applying for their mortgage
- paying for and arranging a survey
- once all is clear, we should be looking to exchange contracts and agree on a completion date.
What can go wrong with a memorandum of sale?
In a property chain where the buyer must sell their own house first, their hands will be tied, and this frustration, delay and uncertainty can lead to chains collapsing, leaving everyone with an absorptive sale. This is where Property Saviour can help by making a cash offer and potentially getting everyone to reduce their price within the chain to allow the sale to still go ahead.
A lot of the time, a buyer can change his/her mind because they have found another property that is better than yours, in their opinion.
The longer it takes to complete a sale, there’s higher risk of a sale falling through. The buyer may try and renegotiate the price after a survey, or back out of a sale completely, or the seller has probably had enough!
If you are a seller, it is best to find a buyer who is ‘ready, willing and able’ without having to sell a property. A cash buyer is a perfect buyer as there are no delays with mortgage surveys, waiting for searches and very little delay.
Property Saviour are genuine cash house buyers. We make a cash offer that’s guaranteed.
What we offer is what you will get with no deductions whatsoever. We can complete within a couple of weeks or quicker. We will also pay £1,500 towards your legal fees. If you are ready to sell now, we are buying.