Everything You Need To Know About The Memorandum Of Sale
This article will cover everything you need to know about the Memorandum of Sale when selling a property.
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Everything You Need To Know About The Memorandum Of Sale
If you want to sell your house, knowing the process can be helpful when you need to sell your house quickly. A Memo of Sale is an important document that saves time between solicitors, estate agents, auction houses, or a cash property buying company.
A Memorandum of Sale or memo of sale is not legally binding, but it is vital in the house sale process because it can speed up the estate agent-to-solicitor communication period.
What is a Memorandum of Sale?
A Memorandum of Sale is a document that confirms the essential legal details of a property transaction during the selling a house process. An estate agent draws it up after a property goes from Under Offer to Sold STC. The Memo of Sale contains as much relevant information as possible:
- The address of the property.
- The agreed sale price.
- The names and contact details of the buyer and seller.
- Contact details of the solicitors representing the buyer and seller.
- The HMRC Registry number.
- Expected dates for completion and exchange.
- Whether it is freehold or leasehold.
- Any special conditions agreed upon as part of the same.
Here is an example of the Memorandum of Sale; the structure could be replicated as a template if you wish to sell privately:
Who issues the Memorandum of Sale?
The estate agent will issue the Memorandum of Sale, which is usually completed within just a few days but occasionally can take longer if parts still need to be included. We advise that the buying and selling parties have all the documentation prepared beforehand.
It is doubtful that you will be able to see a copy of the Memo of Sale as it contains compassionate information about both parties, which are GDPR protected. The solicitors will sign the Memorandum of Sale.
When is a Memorandum of Sale issued?
The Memorandum of Sale will be created as soon as the estate agent makes and accepts the offer, which will then be circulated by email or post. The document is not legally binding, and changes can still be amended.
The timescale for the Memo of Sale is not set in stone but is once an offer has been accepted. Usually it can take 24 hours to over a week for the Memo to be completed. It will all depend on how quickly the solicitors can obtain the information.
How long does it take from a Memorandum of Sale being created to completion?
The average house sale through an estate agent takes 2-3 months; however, sales will depend on both the seller and buyer. The Property Selling Company has a network of solicitors that streamlines the process, creating a hassle-free process for you.
The types of Memorandum of Sale?
Depending on the efficiency of the sale process, the type of Memorandum of Sale may change.
If you are selling through a traditional estate agent or privately, the Memorandum of Sale may take slightly longer to complete than a modern estate agency like The Property Selling Company, where the Memorandum of Sale is relatively fast.
This is because the sale process may involve negotiations and communication between the buyer and seller and their respective solicitors instead of us dealing with the solicitors on your behalf.
What Happens With Memos At Auction House Sales?
The Memorandum of Sale process also differs when selling a property at auction. Once the gravel falls, the contracts are effectively exchanged.
The seller is then legally committed to the sale and will be required to complete the Memorandum of Sale is then expected to be satisfied immediately, as well as paying the deposits and auction house fees; all checks are then assembled, and the documents are sent to solicitors.
Why Is A Memorandum Of Sale Necessary?
Having a Memorandum of Sale is important because the document enables all the critical house-selling information to be located in one place.
Unfortunately, vast amounts of time are wasted in the back-and-forth communications between estate agents and solicitors, sellers and buyers, so the Memorandum of Sale cancels this.
What Happens After A Memorandum of Sale?
A Memorandum of Sale is a document and the first step of selling a property; once it has been issued, the property listing will be changed to ‘under offer’ or ‘sold subject to the contract (STC)‘.
Once both solicitors have received the memo, the actual house-selling process can begin. The conveyancing process will then start to transfer the property information being completed.
Buyer checks, DIP (decision in principle) or AIP (agreement in principle) will also take place, including reviews on ID and proof of funds from the buyer. The evidence of funds will be a mortgage offer within the last two months and require proof of deposit.
This includes buyers’ checks, conveyancing, searches, surveys, RICS General Condition Reports, RICS Homebuyers Surveys, RICS structural Surveys, Property Enquiries and Exchange of Contracts.
These can be highly time-consuming, so ensuring you have a company to handle all the stressful parts of the house-selling process is vital. So why not choose us? We will take all the property negotiations and back and forth between solicitors and even pay for it!
Why Is A Memorandum Of Sale Necessary?
The issues after the Memorandum of Sale has been issued are due to the property chain. All parties involved should inform each other of potential complications or delays to minimise the risk of the chain breaking down entirely.
In a property chain the buyer’s or seller’s transaction is dependent on another property sale. If that house sale falls through, perhaps due to someone changing their mind about the property, the rest of the chain will also fall apart.
Some reasons why a Memorandum of Sale will fail are because:
- The expiration of Mortgage offers.
- The seller of the property changes their mind.
- The buyer of the property pulls out.
- There are delays in documentation completion.
- Some issues surfaced by property surveys.
- There was a slow instruction of solicitors.
- There needed to be more funding by any involved property.
- The completion date keeps getting changed.
Clear and open lines of communication between all parties involved can ensure that everyone is working towards the same goal and can help to identify and address any issues as they arise.
Another issue is the time frame, as the longer it takes to complete a sale, the higher the risk that the buyer or seller may try to renegotiate the price or back out completely. Buyers and sellers should have contingency plans if the sale falls through, such as lining up alternative properties or buyers in advance.
Communication between estate agents and conveyancers at consistent points in the sales process should reduce the total time it takes for the property to complete. Ultimately patience, flexibility and a willingness to work together are essential to successfully navigating the property chain and completing a sale.
