When Is a House Considered Sold Subject to Contract
When Is a House Considered Sold Subject to Contract?
When it comes to buying or selling a property, one of the most important terms to understand is “sold subject to contract”. This phrase can often be confusing for those who are unfamiliar with the process, but it essentially means that a deal has been agreed upon between the buyer and the seller, subject to certain conditions being met.
So, when is a house considered sold subject to contract? Let’s explore this question in more detail.
The Basic Definition
Sold subject to contract means that a buyer has made an offer on a property and the seller has accepted it. However, the sale is still subject to certain conditions being met. These conditions can include things like a survey being completed, the buyer securing financing, and the exchange of contracts.
Until these conditions are met, the sale is not yet legally binding, and either the buyer or the seller can back out of the deal without any financial or legal consequences. Once the conditions are met, the sale becomes legally binding, and the buyer can move forward with the purchase of the property.
When Does the Sale Become Binding?
The sale becomes binding once both parties have exchanged contracts. This means that the buyer and the seller have signed identical copies of the contract, and the contracts have been physically exchanged (usually between the two parties’ solicitors).
Once the contracts have been exchanged, both the buyer and the seller are legally obligated to complete the transaction. If either party fails to do so, they could face financial and legal consequences.
What Happens Between Offer and Exchange of Contracts?
Between the offer being accepted and the exchange of contracts, there are usually several steps that need to be completed. These steps can vary depending on the specific circumstances of the sale, but they often include:
1. Conducting a Survey: The buyer will usually have a survey done on the property to identify any potential issues or defects.
2. Solicitors’ Searches: The buyer’s solicitor will conduct various searches to ensure that there are no outstanding issues with the property.
3. Securing Financing: The buyer will need to secure financing (e.g. a mortgage) before they can exchange contracts.
4. Negotiations: In some cases, negotiations may need to take place between the buyer and the seller to resolve any issues or disputes.
Once all of these steps have been completed and the contracts have been exchanged, the sale is considered sold subject to contract.
Conclusion
In summary, a house is considered sold subject to contract when a buyer has made an offer on a property and the seller has accepted it, subject to certain conditions being met. The sale becomes legally binding once both parties have exchanged contracts, and this is typically preceded by various steps such as surveys, solicitors’ searches, securing financing, and negotiations.
By understanding the meaning of sold subject to contract and the steps involved in a property sale, you can ensure that you are fully informed when buying or selling a home.