If you’re in the process of buying or selling a property, it’s essential to familiarise yourself with the various terms and documents involved. One such document is the Memorandum of Sale. In this article, we will explain what a Memorandum of Sale is, what happens during and after this stage, and how it fits into the broader homebuying process.
What is a Memorandum of Sale?
A Memorandum of Sale is a document that outlines the agreed-upon terms and conditions of a property transaction between a buyer and a seller.
It is typically prepared by the estate agent once an offer has been accepted and serves as a confirmation of the agreed price and any other relevant details.
Although the Memorandum of Sale is not a legally binding document, it does provide a useful reference point for both parties and their respective solicitors throughout the conveyancing process.
What does a Memorandum of Sale include?
A Memorandum of Sale usually includes the following:
- The property’s address and description
- The agreed purchase price
- The names and contact details of the buyer, seller, and their respective solicitors
- Any special conditions or contingencies agreed upon by both parties. This includes specific fixtures or fittings, completion date, etc
The agent will then send copies of the Memorandum of Sale to the buyer, the seller, and both parties’ solicitors.
It’s essential for both the buyer and seller to review the document carefully. All the details must be accurate and reflect the agreed-upon terms.
What happens next?
Following the issuance of the Memorandum of Sale, the conveyancing process begins. The steps involved include:
Instructing solicitors:
Both parties will instruct their solicitors to handle the legal aspects of the transaction. The solicitors will use the Memorandum of Sale as a reference to begin the conveyancing process.
Property survey:
The buyer will usually arrange for a property survey to be conducted. This helps to identify any potential issues with the property, such as structural problems or other defects.
Depending on the survey results, the buyer may renegotiate the price or request repairs.
Mortgage application:
If the buyer needs a mortgage to fund the purchase, they will submit a mortgage application to the lender via their mortgage broker or directly. The lender will carry out a mortgage valuation of the property to ensure its worth the amount being borrowed.
Conveyancing:
During the conveyancing process, the solicitors will carry out various checks and searches, such as confirming the property’s legal ownership, identifying any restrictions or covenants, and checking for planning permissions or potential issues with the property.
Exchange of contracts
Once all the necessary checks have been completed and the buyer’s mortgage has been approved, both parties will sign and exchange contracts. At this point, the agreement becomes legally binding, and the buyer will typically pay a deposit (usually 10% of the purchase price).
Completion
On the agreed completion date, the buyer will pay the remaining balance of the purchase price, and the property ownership will be transferred. The keys will be handed over, and the buyer can now move into their new home.
Additional considerations
While getting to the stage of Memorandum of Sale is an important milestone, it’s not legally binding and there’s some way to go yet.
Until contracts have been exchanged both the buyer and seller can withdraw from the transaction without consequence.
However, depending on how far into the process you are you could still lose money, damage relationships, and waste time. So be sure to do the following:
Be communicative
Ensure that you maintain clear communication with the other side, their solicitor, and the estate agent throughout the process. Address any concerns or questions promptly to avoid misunderstandings and delays.
Be proactive
Stay on top of the conveyancing process by regularly checking in with your solicitor and the estate agent to ensure everything is progressing smoothly. Provide any necessary documentation or information as quickly as possible to prevent hold-ups.
Prepare for delays
The homebuying process can be lengthy and complex, with various factors potentially causing delays. Have a contingency plan in place to manage any setbacks effectively.
Be flexible
Be willing to negotiate and compromise on certain aspects of the transaction if necessary. This can help to maintain a positive relationship with the other party and facilitate a smoother transaction.
You will enjoy a successful and stress-free transaction by keeping the lines of communication open and by preparing for potential challenges.
Need more help?
Whether you’re a first-time buyer or not, you should always thoroughly research the area you’re planning to move to. From crime rates to purchase prices for similar properties nearby, our property report can tell you everything you need to know.
Last Updated: April 21st, 2023
