Memorandum of Sale Explained (Don’t Sell Without This)
Did you know that the average UK house sale takes 2-3 months to complete? That's a long time to be in limbo.
A Memorandum of Sale can expedite those crucial early stages, potentially shaving precious weeks off your timeline. Learn how this document accelerates your sale.
What Details Does a Memorandum of Sale Include
A well-crafted Memorandum of Sale includes specific details that provide clarity and protection for both the buyer and the seller. Here's a breakdown of the typical elements and why they matter:
1. Property Details
- Full Address: Clearly identifies the specific property being sold.
- Land Registry Title Number: This unique number allows solicitors to access essential information about the property's ownership and any restrictions.
- Freehold/Leasehold Status: Indicates whether the buyer will own the property outright (freehold) or have a lease agreement with a landlord (leasehold). This has significant implications for ongoing costs and legal rights.
2. Buyer and Seller Information
- Names and Addresses: Identifies the individuals or companies involved in the transaction.
- Contact Details: Ensures that both parties can be easily reached throughout the process.
- Solicitors' Details: Includes the names and contact information of the legal professionals representing each side, facilitating efficient communication.
3. Financial Details
- Agreed Price: Confirms the sale price, providing a clear baseline for the transaction.
- Deposit Amount: States how much the buyer will pay upfront as a sign of commitment, typically a percentage of the purchase price.
- Cash or Mortgage-Based Sale: Clarifies the buyer's financing method. This impacts the timeline, as mortgage transactions involve additional checks and paperwork.
4. Timeline
- Expected Dates for Exchange and Completion: Provides a target for when the legal transfer will occur (exchange) and when the buyer takes possession (completion). These dates can be adjusted based on the specific circumstances of the sale.
5. Special Conditions
- Subject to Survey, Repairs, etc.: Outlines any specific conditions that must be met before the sale can proceed. This might include the satisfactory results of a property survey or the completion of agreed-upon repairs.
6. Fixtures and Fittings
- List of Included Items: Specifies what items within the property are included in the sale (e.g., carpets, appliances, light fixtures). This helps prevent disputes later on.
Our expert property team has put together a thorough but simplified example of a filled-out Memorandum of Sale to illustrate the key sections and how they might be completed:
| Sections | Details |
|---|---|
| Full Address | 123 Main Street, Anytown, England AB1 2CD |
| Land Registry Title Number | ABC123456 |
| Freehold/Leasehold Status | Freehold |
| Buyer's Name | John Smith |
| Buyer's Address | 456 High Road, Anytown, England AB2 3DE |
| Buyer's Solicitor | ABC Solicitors |
| Seller's Name | Jane Doe |
| Seller's Address | 123 Park Street, Anytown, England AB1 2CD |
| Seller's Solicitor | XYZ Law Firm |
| Agreed Price | £250,000 |
| Deposit Amount | £25,000 (10% of the agreed price) |
| Cash or Mortgage-Based Sale | Mortgage-Based Sale |
| Expected Date for Exchange | 15th of July, 2024 (estimated) |
| Expected Date for Completion | 29th of July, 2024 (estimated) |
| Subject to Survey | Sale is conditional on a satisfactory property survey report. |
| Fixtures and Fittings | All standard fixtures and fittings are included (list main items if space permits, e.g., carpets, specific appliances, etc.). |
| Signatures | [Signatures of Buyer, Seller, and/or Estate Agent] |
You can also find a real life memorandum of sale template below:
Important Notes regarding the example MoS
- This is a simplified example. More complex transactions might involve additional clauses or details
- The exact formatting and wording of a Memorandum of Sale can vary between estate agents and quick sale companies.
- Solicitors would always review and may offer amendments to the Memorandum of Sale before it's officially issued.
Related: The true cost of selling your house
What is a Memorandum of Sale?
In the UK, a Memorandum of Sale (MoS) is a formal document that outlines the key terms agreed upon between the buyer and seller of a property. After a seller accepts an offer, the estate agent, auctioneer, or home-buying company typically drafts the MoS.
Why Does It Matter?
It serves several crucial purposes within the property transaction:
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Confirms Agreed Terms: The MoS solidifies the essential details of the sale in writing. This includes the agreed price, the buyer and seller's information, property details, and any specific conditions. By having this written record, both parties have a clear understanding of the terms from the outset, minimising the risk of misunderstandings down the line.
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Serves as a Reference Point: Throughout the sale, the MoS becomes a central reference for all involved parties, including solicitors, mortgage brokers, and surveyors. Rather than relying on memory or verbal agreements, everyone can quickly check essential details in the MoS, ensuring accuracy and alignment.
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Kickstarts the Conveyancing Process: Conveyancing is the legal work involved in transferring property ownership. The MoS plays a vital role here – once it's issued, both the buyer's and seller's solicitors can begin the necessary searches, checks, and paperwork. A timely and accurate MoS streamlines this entire process, potentially saving weeks off the completion timeline. In fact, according to Homeowners Alliance, the average UK property transaction takes 10 weeks from offer acceptance to completion – a clear MoS can help your sale stay on track to meet this average.
The Memorandum of Sale isn't a magic bullet that guarantees a lightning-fast sale, but it's a powerful tool to promote clarity, efficiency, and timely action from all parties throughout your property transaction.
The Memorandum of Sale in Action: How It Works
Once the Memorandum of Sale is signed and issued (typically by the estate agent), the real work of completing the property transaction begins. Here's a breakdown of the typical steps and how the MoS keeps things moving:
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Distribution to Solicitors: The MoS is sent to both the buyer's and seller's solicitors. This gives them the green light to start the conveyancing process.
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Initiation of Conveyancing: Solicitors begin the legal tasks of transferring ownership. This includes:
- Title Searches: Verifying ownership, checking for restrictions on the property
- Local Authority Searches: Identifying issues like planning permissions, flood risks, etc.
- Other Legal Checks: Depending on the property, additional searches or inquiries might be necessary.
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Buyer Actions:
- Mortgage Approval: If the buyer is using a mortgage, they'll work with their lender to secure the final loan offer. The MoS has the details the lender needs to begin this process.
- Property Survey: Most buyers commission a survey to assess the property's condition. The MoS can be shared with the surveyor to ensure they have accurate information.
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Potential Negotiations: Survey results or legal checks might reveal issues that need addressing. The MoS helps because:
- It provides a clear baseline to compare against (Did the survey find something unexpected?)
- It established initial terms, making it easier to negotiate any adjustments.
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Progressing Towards Exchange: As checks are completed and any issues are resolved, both sides move towards the exchange of contracts. This is the legally binding stage – and a clear MoS can help ensure a smooth path to get there!
The Time-Saving Advantage of a Clear MoS
While every property sale is unique, a well-crafted Memorandum of Sale can accelerate the entire process by:
- Establishing a Shared Understanding: By eliminating ambiguity early on, both parties and their solicitors can work from the same information, reducing the need for clarifications that cause delays.
- Enabling Parallel Action: The MoS allows solicitors and the buyer to begin their respective tasks immediately, rather than waiting for every single detail to be verbally confirmed.
- Providing a Reference Point: If questions arise or there are concerns, both sides can quickly consult the MoS, fostering faster resolution.
The Memorandum of Sale & Quick House Sales
If you're looking for a fast property sale, the Memorandum of Sale (or a similar agreement) takes on an even more significant role. Here's how the process typically differs from a traditional estate agent route:
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Quick Sale Differences: With a quick house buying company, there's typically less "back and forth" negotiation. You'll receive a cash offer based on the property's valuation, and the focus is on finalising the sale swiftly.
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Clarity and Security: A well-drafted MoS, or a company's version of an initial agreement, is crucial. It clearly outlines the agreed price, expected timeline, and any specific conditions, providing you with reassurance even when the transaction moves quickly.
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Streamlined Timeline: In a quick sale, you can expect:
- Faster Issuance: The MoS-type document will be produced soon after your offer is accepted.
- Accelerated Exchange & Completion: Reputable quick sale companies are geared towards efficiency. While standard legal checks still apply, the process can potentially be completed in weeks rather than months.
- Quicker Access to Funds Once contracts are exchanged, you'll receive the funds in a much shorter timeframe than a traditional sale.
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The Value of an MoS-Type Document: Even in a fast sale, having an agreement in writing protects both you and the buyer. It minimises confusion and demonstrates a commitment to completing the transaction.
Legal Aspects of A Memorandum of Sale Explained
While the Memorandum of Sale provides a solid foundation for your property sale, it's important to understand its legal standing and address common concerns:
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Is an MoS Legally Binding? In the UK, a Memorandum of Sale is NOT a legally binding contract. It is usually marked "Subject to Contract," meaning both the buyer and seller remain free to withdraw from the sale until the formal contracts are exchanged.
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Addressing 'Gazumping' and 'Gazundering'
- Gazumping: This happens when a seller accepts a higher offer from another buyer after the MoS is issued. While frustrating, it's often possible until contracts are exchanged.
- Gazundering: This is when a buyer lowers their offer at the last minute, hoping the seller will be desperate to complete. While the MoS doesn't prevent this entirely, it does provide a written record of the originally agreed price.
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Withdrawing After the MoS: While not legally binding, the MoS does signal an intent to proceed. If you change your mind, it's best to inform the other party and your solicitor immediately. There may be some costs incurred, such as solicitor's fees, even if the sale doesn't complete.
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The Importance of a Solicitor: A solicitor is essential in protecting your interests throughout the property transaction. They'll review the MoS and advise you on your legal options at every stage. Never rely solely on the MoS for legal protection – always seek professional guidance.
The Memorandum of Sale serves as a valuable starting point, but it doesn't replace the formal conveyancing process or the need for expert legal advice from a qualified solicitor.
Final Thoughts & Key Takeaways
The Memorandum of Sale is a cornerstone of efficient and transparent property transactions in the UK. While it doesn't replace the formal legal process, it serves as a roadmap that guides all parties involved. Key takeaways include:
- Clarity is King: A detailed MoS reduces the risk of misunderstandings and delays, benefiting both buyers and sellers.
- Faster & Smoother: By providing a clear reference point, the MoS facilitates timely action from solicitors, surveyors, and lenders, potentially saving weeks on your sale.
- Security & Protection: Even in quick house sales, an MoS-type document formalizes the agreed terms, offering peace of mind for the seller.
- Expert Guidance is Essential: Always consult a solicitor to safeguard your legal interests throughout the sale process.
If you want to sell your property quickly and minimise stress, a clear and comprehensive Memorandum of Sale can be invaluable. Whether you choose a traditional estate agent or a quick sale company, make sure the terms of your sale are documented in writing. This protects your interests and ensures a smoother transaction from start to finish.
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