If you are in the process of selling a property, you may be asking yourself the question ‘what is a memorandum of sale?’.
A memorandum of sale is often mentioned by estate agents on the assumption you’ll know what it is.
However, it’s perfectly normal to be confused by this term. But, fear not as we are about to explain everything you need to know about this important document.
What Is A Memorandum Of Sale In Property?
A memorandum of sale is a document that is created once a sale has been agreed on a property.
It’s not a legally binding document but it does set out the agreed price and declares the intention of both the buyer and seller to complete the transaction.
It will also show:
- The name and address of both the buyer and the seller
- Details of the solicitors that will be handling the transaction
- Important details about the property the offer has been agreed on
- Which mortgage lender will finance the purchase (if applicable)
It’s, therefore, a record of the sale and purchase that is about to happen (assuming the transaction will complete).
While there are no legal implications to the document, it does seek to clarify and confirm the details of the agreed transaction.
Who Provides The Memorandum Of Sale?
It is usually the sellers’ estate agent that provides the memorandum of sale.
Since the estate agent selling the property is often due a commission when the sale completes, it makes sense that they prepare the memorandum of sale.
In cases where a sale has been agreed without an estate agent, it would be down to the seller of the property (or a representative of theirs) to issue the memorandum of sale.
How Long Does It Take To Get A Memorandum Of Sale?
This will entirely depend on the estate agent who has been instructed to sell the property.
Typically, it will be prepared within a few days of a sale being agreed. However, it can take longer, especially one of the parties does not yet have certain details available (such as they are yet to appoint a solicitor).
You may also need to allow extra time for the document to be received in the post since not all estate agents send them via email.
How Does It Differ From A Notification Of Sale?
Put simply, there is no difference between a memorandum of sale and a notification of sale.
‘Notification of sale’ is simply another name for ‘memorandum of sale’ and the document contains exactly the same information.
It is, therefore, not a legally-binding document. Instead, it’s used for information purposes only.
Who Should Sign A Memorandum Of Sale?
Both the buyer and the seller of a property would be expected to sign a memorandum of sale. However, signing the document does not make it legally binding.
The buyer of the property is not required to buy the property (and the seller is not required to sell the property) until the contracts have been exchanged during the conveyancing process.
Therefore, the act of signing the memorandum of sale is simply to show that you intend to complete the transaction on the terms stated in the document.
What Does A Memorandum Of Sale Include?
The memorandum of sale is simply setting out formally the details of the buyer and seller and the price that has been agreed.
However, it will also include additional information such as details on any fixtures and fittings included in the transaction. It will also state an anticipated date of exchange, though at this early stage it is just a rough agreement.
Both the buyer and selling can choose to add any other specific details they would like the solicitors to be aware of at this stage. Ultimately, the memorandum of sale is there to set the legal process in motion and needs to accurately reflect what has been agreed at that point.
What Does A Memorandum Of Sale Look Like?
A memorandum of sale does not need to look anything special. In fact, most memorandum of sale documents are very plain and concise.
That’s because they only need to convey the correct information clearly. There is no need for anything fancy.
Here’s an example memorandum of sale that’s been completed for a fictional transaction:
You can click here to download this example of a completed memorandum of sale document.
Download A Free Memorandum Of Sale Template
Of course, one of the fastest ways to create a memorandum of sale for a property transaction is to download a template.
This was created in Microsoft Word and gives you the opportunity to simply fill in the blanks to create your own document.
Remember, the selling agent should provide this document for you. However, if you are not using an estate agent to sell your home, this template will allow you to create a document that provides all of the key information required.
Is A Memorandum Of Sale Legally Binding?
While the memorandum of sale is an important document that confirms the original agreement of the parties, it is not legally binding.
That’s because, right up until contracts have been exchanged, either party can withdraw from the agreement or change the terms of the deal.
It is better to think of the memorandum of sale as more of a written record of what was agreed before the legal process began. While not legally binding, it can be useful to refer back to later if there are any disagreements.
What Happens After A Memorandum Of Sale?
Once a memorandum of sale has been issued, the sales process can begin.
The selling estate agent will usually change the property to ‘Sold STC’ (the STC stands for ‘Subject To Contract’) and copies of the memorandum of sale are sent to the buying and selling solicitors.
They will then use this to draw up the legal contract along with the other information provided by you and the buyer/seller.
Essentially the memorandum of sale is the first part of the legal process and is necessary to kick-start the conveyancing process.