A memorandum of sale is a written confirmation containing the essential details of a property transaction. This document will either be drawn up by the seller’s estate agent, auctioneer or home buying company. It will typically be drafted up as soon as possible, generally within a few days, following a verbal agreement of the sale.
Whether you are buying a new home or looking to sell your current house, a memorandum of sale is a vital document that you’ll encounter as it is required for the sale to go through quickly and efficiently. The property sale will not be completed without it.
Whilst a memorandum of sale is not legally binding, it is still a contract. Memorandums can be though of as a preliminary measure done to clarify the terms of an agreement before it is put in place.
What Will a Memorandum of Sale Include?
A memorandum of sale is a legal document recording the details of a sale of a property used to record that the sale of a property has been agreed between buyer and seller subject to contract, As such, it will contain as much relevant information as possible, including:
- The address of the property
- The agreed sale price
- The names and contact details of the seller and buyer
- Contact details of the solicitors representing the seller and buyer
- Expected dates for exchange and completion
- The HMRC Land Registry number
- Information about the property, such as whether it is a freehold or leasehold
- Any special conditions agreed as part of the same, for example, a sale at a specific price subject to certain repairs being made
This document will proceed to act as written evidence that an offer has been accepted under all known and accurate circumstances, as well as recording the amount of money that will be paid.
What Are the Different Types of a Memorandum of Sale?
Depending on how the sale is proceeding will determine which type of memorandum of sale is followed.
For example, if you are selling your house through a typical estate agent or a quick sale house company, the memorandum of sale will typically be completed relatively quickly. Its preparation can take anywhere from 24 hours to a few days.
However, if you are selling your property via an auction house, once the hammer has been brought down, the contracts are effectively exchanged. The memorandum of sale is then expected to be completed immediately as well as paying the deposit and auction house fees. All checks are then completed, and the documents are sent to solicitors.
What Comes After a Memorandum of Sale?
As soon as it is issued, the necessary arrangements to complete the sale of the property can be made.
Once the memorandum of sale has been signed, a buyer may schedule an independent survey to check that their offer is reasonable. If the survey uncovers any issues that the buyer wasn’t aware of, the buyer is perfectly within their rights to terminate this sales memo or change their stance on the agreement.
The memorandum of sale can then proceed to play a vital part in the later surveying of the property because it contains so many details about the house.
What Can Cause a Memorandum of Sale to Fall Through?
One of the primary reasons that can cause a house sale to fall through, and therefore a memorandum of sale to fall through, is time. In short, the longer a house sale takes, the higher the chance that either the buyer or the seller will become ‘unsettled’ and try to renegotiate or, even worse, back out altogether.
For example, a house sale may fall through if the buyer pulls out before the exchange because another house has caught their attention after a recent price reduction, or a change of circumstances causes the buyer to no longer wish to move or perhaps not be able to.
To avoid your sale falling through, there are a few things you can do to help your case, however, communication is the most important tip to remember in this case. Communication is the driving force of a property sale – from solicitors and surveyors to buyers and sellers – strong communication helps to keep all parties connected and ensures transparency regarding sales. This should build trust and reduce the likelihood of a buyer pulling out before the exchange, keeping both your house sale, and memorandum of sale, in tact.
