Legal Protection For Property Buyers: The Memorandum Of Sale’s Purpose In The UK

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Purchasing a home is a major financial commitment and life decision for most buyers. When making such a substantial investment, having your legal interests protected as a buyer is essential.

This is where the memorandum of sale meaning comes into play. A memorandum of sale is a legal document that outlines the key terms agreed upon between a property seller and buyer. It provides evidence that a sale has occurred and delivers a basic level of legal protection to the buyer before contracts are exchanged.

For buyers unfamiliar with property transactions, understanding the purpose and benefit of this document can give helpful peace of mind during the early stages. Let’s examine why the memorandum of sale is an important part of safeguarding buyers’ rights when purchasing a property in the UK.

What is a Memorandum of Sale?

In simple terms, a memorandum of sale is a document that records the core specifics of the property transaction agreed verbally between the seller and buyer. It captures key information like the address, price, names of parties involved and proposed completion date.

The document is typically completed and signed by both buyer and seller during the initial negotiations when terms are verbally settled. This usually occurs before the conveyancing process fully commences.

A memorandum of sale represents a milestone showing that essential terms have been reached pending the legal formalities. It provides a basic preliminary agreement that is then legally formalised through the actual contract.

Key Details Included

While not as comprehensive as the full contract, the memorandum of sale still includes important details like:

  • Names of buyers and sellers
  • Full address of the property being sold
  • Agreed sale price
  • Amount of deposit paid
  • Proposed completion date
  • Brief details of what’s included in the sale, e.g. fixtures, fittings, chattels
  • Any special conditions, e.g. subject to survey

Capturing this key information provides a clear record of what both parties have agreed at that initial stage. It creates a documented framework for the deal to proceed towards the binding contracts.

How it Provides Buyer Protection

The importance of the memorandum of sale stems from the basic legal protection it introduces before contract exchange. For buyers, this delivers some key assurances:

  • Evidence an agreement has been reached – this confirms the seller has committed to the sale, providing the buyer with more security.
  • Ability to secure mortgages – lenders may request a memorandum of sale before formally approving a mortgage to finance the purchase.
  • Defence against gazumping – documenting agreed terms makes it harder for the seller to accept a higher offer from another buyer later on.
  • Ability to take legal action if the seller withdraws – buyers can pursue reimbursement of expenses using the memorandum as evidence should the seller unusually withdraw at this advanced stage.
  • Proof of partial performance – the existence of a memorandum assists buyers in successfully claiming part performance if the contract fails to be completed.
  • Reinforces agent’s authority – helps prove the seller’s estate agent had the authority to reach an agreement on the specified terms on the seller’s behalf.

While still not a binding contract between both parties at law, the memorandum of sale reduces risks for the buyer by formally documenting the transaction’s core details agreed up to that point.

It provides important evidence demonstrating the progress made so far. This delivers a basic level of legal protection for buyers should anything go awry before contracts are signed and exchanged.

When is it Completed?

In most property transactions, the memorandum of sale is completed early in the home buying process at the point a verbal agreement is reached between seller and buyer on the key terms.

It formalises the outcome of the initial price and terms negotiation. This usually occurs before instructing solicitors and commencing in-depth conveyancing work.

The precise timing can vary depending on factors like property type and any chain involved. But generally, the memorandum provides interim protection once a verbal agreement is reached and before advancing too far into legal formalities.

Completing it early on also increases its effectiveness. If left until much closer to exchanging contracts, buyers gain less benefit from the protection it provides.

How Does it Protect Against Gazumping?

Gazumping is an unfortunate practice in some property transactions where the seller accepts a higher offer from a new buyer later in the process – even after agreeing on a sale price with the original buyer. This leaves the initial buyer disappointed having invested time, money and emotional equity into the transaction.

While not offering watertight protection, the memorandum of sale does reduce the chances of gazumping occurring. Documenting the terms verbally agreed upon with the original buyer makes it more difficult for the seller to withdraw and accept a new higher offer.

With written evidence of the price already settled, the seller risks breaching terms by gazumping. This would entitle the buyer to seek compensation for losses incurred if they withdraw the property from sale at that advanced stage.

While still possible, gazumping becomes less tempting for the seller when a memorandum of sale is in place. This provides some deterrent against accepting an increased offer from new potential buyers.

Features that Strengthen Protection

When completing the memorandum, certain measures can be taken to further strengthen the protection it provides:

  • Nominate the buyer’s solicitor – specifying the buyer’s chosen legal representative gives weight to their legitimacy as a serious purchaser.
  • Include the agent’s name – documenting the estate agent involved reinforces their authority to broker the agreed terms on the seller’s behalf.
  • Note any special conditions – highlighting any conditions like “subject to survey” clarifies what needs resolving before contract exchange.
  • Signatures of both parties – signed by the buyer and seller or their respective agents, this evidences full agreement from both sides.
  • Identify property specifics – noting unique identifiers like postcode and title number provides an unambiguous reference to the property and land.
  • Witness signatures – signing as witnesses endorses the document’s authenticity and the buyer and seller’s consent.
  • Date of agreement – recording the actual date provides chronological proof of when terms were agreed.

Taking these steps cements the details and adds further assurance for buyers that their interests are protected at this initial stage. It also reduces the scope for sellers to go back on agreed terms.

Benefits Of Verbal Agreements

Reaching a verbal agreement is a common initial milestone in property deals. However, the problem with strictly verbal agreements is they become a case of one party’s word against another’s if a dispute arises.

The memorandum of sale delivers buyers stronger ground by documenting what was verbally agreed. Having a written record makes it unambiguously clear what both parties consented to regarding the property and price.

Rather than just assertion, the memorandum provides evidence. This gives buyers confidence that what was agreed is preserved and documented. It also reduces seller temptation to renege on terms since they are captured formally in writing.

Evolution to Contracts

Once signed by both parties, the memorandum of sale ushers the transaction towards the more definitive contracts. The information within the memorandum forms a framework that the contracts legally build upon in greater detail.

From the broad brushstrokes of the memorandum, the contracts evolve into a comprehensive legally binding agreement covering all aspects of the transaction. Additional specifics are defined like property condition, fixtures and fittings, completion arrangements, as well as indemnities and limitations.

This transition from memorandum to contract expands the parties’ mutual understanding while securing the transaction fully in law. It culminates with the contracts being signed, exchanged and completed – at which point the deal becomes irrevocable.

When the Memorandum Ceases to Have Effect

The memorandum of sale delivers its protective benefit to buyers during the transitional phase between the initial verbal agreement and the exchanged contracts.

Once contracts are exchanged, the memorandum effectively ceases having legal effect. Contract exchange makes the transaction legally binding so the preliminary protection of the memorandum is overtaken.

Hence the memorandum’s purpose is limited to the interim period where a transaction is verbally agreed upon but contracts are yet to make it legally secured. It plugs the protection gap at this initial stage to safeguard the buyer.

Limitations of the Memorandum

Despite its core protective purpose, the memorandum of sale has certain limitations buyers should appreciate:

  • Not fully legally binding – it only provides evidence of agreed terms, not a legally binding contract itself.
  • Basic level of protection – it does not deliver the extensive protections of a comprehensive contract.
  • Risk of seller withdrawal – while deterred, the seller could still potentially withdraw and abort the initial agreed sale.
  • Post-exchange protection still required – Only contract exchange creates a binding agreement fully securing the transaction.
  • Not every transaction uses one – Some property deals proceed directly to a contract without an interim memorandum.
  • Protection duration is short – Its benefit only spans the period between verbal agreement and contract exchange.

While not unbreakable, the memorandum does offer buyers a degree of reassurance and legal recourse at a stage when they are otherwise vulnerable if sellers withdraw cooperation. But it does not replace the need for legally watertight post-exchange contractual protection.

Resolving Disputes

In rare instances where disputes do arise following the agreement of a memorandum, buyers have options to pursue a remedy through the courts if required.

With evidence of agreed terms, buyers can feasibly seek legal redress for any losses incurred should the seller unfairly withdraw from the sale post-memorandum.

The court can also compel reluctant sellers to complete transactions if they attempt to resist progression to contracts without due cause after signing a memorandum.

However, the limited protective nature of memorandums means desired outcomes cannot be guaranteed if disputes reach the courts. However, the existence of a memorandum strengthens a buyer’s position in any case where they seek legal resolution.

When are Memorandums Not Required?

While frequently utilised in property transactions, memorandums of sale are not a mandatory requirement under English law. The importance placed on having one differs between parties.

Many prospective buyers see them as providing desirable extra security during the pre-exchange phase. However, some sellers’ agents see limited value given contracts themselves make sales binding.

Ultimately there is no legal obligation on sellers to provide a memorandum. But where buyers stipulate one as a condition offering security, most sellers will likely agree to furnish one in the interest of ensuring the deal progresses smoothly.

There are also some specific situations where memorandums provide less value, like:

  • New build homes – Additional consumer protections often apply with new builds, reducing the need for a memorandum.
  • Property auctions – The fall of the auctioneer’s hammer contractually seals the deal, bypassing the need for a separate memorandum.
  • Investors/cash buyers – Investors sometimes waive requirements for legal formalities like memorandums to accelerate deals.

While useful in many transactions, the case for memorandums is not always clear-cut. Buyers should assess their needs as part of broader requirements when purchasing.

Protecting International Buyers

For overseas buyers purchasing UK property from abroad, having a memorandum of sale in place can be particularly useful. It provides clear evidence of the transaction and agreed terms.

Given the greater complexity of transacting from overseas, the memorandum delivers extra reassurance. It contractually documents arrangements in advance of funds being committed or exchanged.

For buyers who may be less familiar with UK conveyancing formalities, it also provides helpful confidence that a deal is in motion pending legal completion.

As evidenced by terms, it adds a layer of contractual assurance at a documented stage of agreeing to core issues like price. This provides overseas buyers with increased comfort when buying UK property remotely.

The Buyer’s Wider Protections

Beyond the memorandum of sale, buyers have access to wider protections under consumer legislation and professional codes of conduct.

Consumer regulations require estate agents to treat customers fairly by acting transparently and preventing misrepresentation. Professional bodies also enforce standards on solicitors and conveyancers regarding service obligations.

Buyers should ensure agents and legal advisors are signed up to oversight schemes for additional peace of mind. Home surveys, searches and title checks also help uncover risks.

While the memorandum delivers initial insurance, buyers are advised to leverage the full suite of available consumer protections when purchasing property.


The memorandum of sale occupies an important interim position within property transactions in the UK. Documenting terms at this initial verbal agreement stage provides a basic but useful legal safety net for buyers before contract exchange.

It delivers evidence that the seller has committed to the property sale pending legal formalisation. This deters gazumping and gives buyers some options for redress should the seller later withdraw without due cause.

However, buyers benefit most by viewing the memorandum of sale as just one component within a comprehensive range of protections. Robust conveyancing, compliance with consumer codes and prudent professional advice also ensure buyers’ legal interests remain fully safeguarded when purchasing property.

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