What is a Memorandum of Sale?

Property transactions are notorious for legal complexities and extensive paperwork. In this landscape, the Memorandum of Sale stands out as an important document.

What is a Memorandum of Sale?

A Memorandum of Sale is a written record of the agreement between the buyer and the seller in a property sale. It's a statement that an offer has been accepted subject to contract (SSTC), and that both parties intend to proceed with the transaction.

What does it include?

A Memorandum of Sale typically includes the following:

1. Information about the property: Including the address, boundaries, and unique identifiers.
2. Names of parties involved: Including the contact details of both buyer and the seller.
3. Property purchase price and deposit: The agreed-upon price at which the property is being sold, and the amount of money that the buyer is required to pay as a deposit.
4. Special conditions: Any specific conditions or provisions that are part of the agreement, such as repairs to be completed before the sale or certain contingencies.
5. Exchange and completion dates: The dates by which the parties expect to exchange contracts, and complete the sale.
6. Signatures: Signatures of both the buyer and the seller, indicating their agreement to the memorandum's terms, along with the signatures of their solicitors or conveyancers.

Is a Memorandum of Sale legally binding?

No, the document isn't a legally binding document - it's a statement of intent from both the buyer and seller.

Why is the Memorandum of Sale important?

While a Memorandum of Sale isn't legally binding, it serves to guard interests across the buying and selling process.

First and foremost, a memorandum is a reference point for all parties involved. As a sale template, you can clearly see who's involved in the transaction, and who bears responsibility for key points of interest. As a result, it serves as a good framework for solicitors and lenders during the subsequent stages of the conveyancing process, facilitating a smoother transition from offer acceptance to completion.

A Memorandum of Sale can also help protect the buyer's interests by securing their position as the preferred purchaser. While not legally binding like an exchange of contracts, a memorandum can still have legal gravitas - for instance, if the seller were to accept another offer after signing the memorandum, the buyer could have a potential claim in court.

Who issues the Memorandum of Sale?

Memorandums of Sale are usually issued by the estate agent who was instructed by the homeowner to handle the marketing and sales progression of their house sale. Estate agents aren't always responsible for the memorandum of sale however.

Cash buyers and online estate agents also issue memorandums for their clients. In auction houses, the memorandum of sale is issued immediately after the deposit and auction house fees are paid.

Every house sale requires an estate agent you can trust. Make sure you're selling with the best today.

When is a Memorandum of Sale issued?

An estate agent sends a memorandum as soon as an offer is accepted by the homeseller. It can take a few days to be completed, but it can take longer if the parties have not prepared the necessary information.

What can cause delays in the completion of the Memorandum of Sale?

Lots of things - but common delays often centre around the buyer, the mortgage lender, and their solicitor. Confirmation of mortgage funds can take a while to come through, especially if the buyer hasn't prepared first. Likewise, acquiring a solicitor can take time.

If you're a buyer, it's always worth being prompt and timely in your responses. Give yourself plenty of time to instruct a solicitor and request an agreement in principle from an ideal lender. Always communicate clearly with the seller to ensure no wires are crossed.

What does a Memorandum of Sale look like?

Want to see what a memorandum looks like? Here's a sample:

What happens after the Memorandum of Sale is issued?

After the memorandum has been issued, the property listing on portals like Rightmove and Zoopla will change from 'under offer' to 'sold subject to contract'. Once the memorandum is complete, the conveyancing process can start.

What does this involve?

The buyer's solicitor will begin ordering surveys of the property, while the seller is expected to complete documents such as the TA6 (Property Information) Form and the TA10 (Fixtures and fittings) Form. These are just some of the preliminary actions of the conveyancing process, with confirmation of mortgage funds and the transfer of deposit coming later.

Can anything go wrong with a Memorandum of Sale?

A Memorandum of Sale is a pretty straightforward document - but things can still go wrong with it, and the conveyancing process as a whole:

• Solicitors use the memorandum as a template for the information submitted during a contract exchange. If any details featured in the memorandum change, and the solicitors aren't duly notified, the transaction could be at risk.
• As mentioned earlier, a Memorandum of Sale is not legally binding - as such, there’s still room for things to go wrong. Buyers and homesellers are still technically able to pull out of the transaction if they wish to.
• A Memorandum of Sale isn’t to be taken as an account of all the legal and regulatory variables related to the property. Things like unresolved title disputes and environmental concerns appear later in the conveyancing process.
• Memorandums can be made null and void through problems elsewhere in the property sale. Unfortunately, chain complications are often completely out of your hands, but you can read up on how to deal with managing a property chain here.

Summary: Buyers - it pays to be prepared!

A memorandum of sale is an excellent indication that the property transaction is progressing in the right direction - but it's on buyers to get their details right. Make sure you at least have a conveyancer in mind, and a mortgage agreement in principle to help finance your house purchase.