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What is a Memorandum of Sale?
Where a property is being sold with an estate agents, they will draw up what is known as the memorandum of sale, upon commencement of the transaction.
So, what is a memorandum of sale, why is a memorandum of sale important, and what happens after a memorandum of sale? Our leading conveyancing solicitors explain below.
Our helpful guide to the memorandum of sale:
What is a memorandum of sale?
The memorandum of sale is a document which is provided to all parties in the transaction, and confirms important information that will assist the matter proceeding.
The memorandum of sale can be drafted by an auctioneer, home buying company, or more commonly, an estate agent, and is then sent to both the buyer's and the seller's conveyancing solicitor.
What is included in a memorandum of sale?
The memorandum of sale includes details of the parties involved in the property sale, including the buyer, the seller and their acting conveyancing solicitors, together with their addresses and contact details.
Most Memorandums of Sale also contain the following information:
Details of the property being dealt with, including the full address and tenure, i.e. freehold or leasehold
The agreed price of the property
Confirmation as to any specific requirements the parties may have in respect of Completion
What fixtures and fittings will be included in the sale
How much of a deposit will be paid for the property
Confirmation as to whether the prospective purchaser will be buying the property cash, or will be securing finance by other means, such as a mortgage
The name/details of the mortgage brokers/advisors involved in the sale
The memorandum is also accompanied by the energy performance certificate, as this is legally required in order to sell the property
As you can see, the memorandum of sale can provide important information relating to the transaction and is provided upon commencement, so that the legalities of the transaction can proceed without delay.
Why is the memorandum of sale important?
The memorandum of sale is an important document that contains all of the relevant information relating to the property transaction all in one place.
It allows the property transaction to run smoothly, and prevents time from being wasted as information is requested between parties involved. While it is an important document in the process the memorandum of sale is not legally binding. It is distributed by the estate agent after the offer is accepted, simply to ensure that all parties involved in the property transaction are on the same page, and prevent disagreements or disputes about aspects of the property transaction further down the line.
It is because of this that the memorandum of sale needs to be thorough, and completely accurate. While the buyer can still withdraw after the memorandum of sale has been issued, it is much less likely to happen if the document is entirely honest and transparent.
What happens after the memorandum of sale is sent?
The memorandum of sale is essentially the first step of the property transaction process.
After the seller has accepted an offer on the property, the estate agent will send the memorandum of sale to all parties involved, and once received by the conveyancing solicitors, they can get to work on the conveyancing process.
Our specialist conveyancing solicitors always ensure to thoroughly check the memorandum of sale as soon as we receive it, so that any issues can be addressed, and the conveyancing process can begin without any delays for our client.
To learn more about what comes after the memorandum of sale, see this explained in full here.
An example of a memorandum of sale from our conveyancing solicitors:
Here, our conveyancing solicitors run through an ideal memorandum of sale, and what we hope to see included in them.
1. Full names of both parties- We need the full names of the buyers and sellers in the memorandum of sale, ideally taken straight from their passport or ID.
2. Conveyancing solicitor's details- We also need the full details, such as an address, contact number, and email address, for the other solicitors involved in the transaction.
3. Proposed timescales- If the memorandum of sale can contain a proposed timescale for the completion date, it can help to give our conveyancing solicitors how long the parties involved are expecting the process to take.
4. Estate agents’ contact details- It can be helpful to see the contact details for the estate agents involved in the memorandum of sale, should we need to get in touch with them about anything.
5. Details of any estate agent's fees- If we are acting for the seller of the property, we can pay any estate agent's fees directly from the net sale proceeds on the day of completion, so it can be useful to know the details of these in the memorandum of sale.
6. Mortgage details- If both parties are aware that a mortgage is being used in the property transaction, it is useful to provide details of this in the memorandum of sale.
Common issues with a memorandum of sale and how to solve them:
Once the memorandum of sale has been issued, most of the problems that occur in the conveyancing process relate to issues within the property chain. For a full overview of property chains, see this here.
While the problem might not be related to either party involved in the property transaction, a breaking of a link in the property chain further down the line from you can have ripple effects on the entire chain.
Another common issue after the memorandum of sale, is delays occurring in the duration of the transaction. In all property transactions, the completion date is posited at 4 weeks after the final exchange of contracts. However, there can be delays that lead to this period being longer. One of the biggest problems is buyers and sellers working with in-experienced conveyancing solicitors who fail to notice problems until it is too late, and do not keep on top of things throughout the process.
When you work with MG Legal’s leading conveyancing solicitors, you can rest assured that your solicitor will go above and beyond to ensure that no delays occur in your property transaction, from the memorandum of sale right up until the completion date.
We will always be on hand to answer any questions or queries that you have throughout the process, and will provide you with regular updates on your property transaction.
To learn more about our team of conveyancing solicitors, and why we are the right team for you, see this here.
Or, to speak to a conveyancing solicitor today, simply contact us online here, or email us at firstname.lastname@example.org .