To boost your offer’s appeal against other potential buyers, get qualified. It shows your capability of seeing the transaction through to completion, reducing the risk of a failed sale during SSTC.
Have you ever encountered ‘Sold Subject to Contract’ (SSTC) tagged on a property listing and found yourself puzzled? The acronym SSTC represents Sold Subject to Contract. It indicates that while a property seller has accepted an offer from a buyer, the legal and paperwork aspects are yet to be finalised. There’s no monetary exchange, and nothing is legally enforceable. The price is still negotiable, and the buyer and seller retain the right to back out.
SSTC: WHAT IT CONVEYS TO THE PUBLIC
Beyond the parties directly involved in the transaction, SSTC serves as a signal to other potential buyers who might discover the property during the SSTC phase. It indicates that an offer on the property has been accepted, and the buyer and seller have engaged solicitors to finalise the deal.
IS A SALE ASSURED WHEN A PROPERTY IS SSTC?
The straightforward response is ‘no’. Any party can withdraw from the transaction, with about one in three deals collapsing during the SSTC phase. The buyer and seller can retract when a property is SSTC since there’s no legal obligation. The deal only becomes legally binding upon contract exchange, except in Scotland, where an accepted offer is legally binding.
HOW TO MINIMISE THE RISK OF A FAILED SALE
Accelerating the sale process is the most effective way to ensure its success.
Here are some tips for efficiently completing your purchase during the SSTC stage:
Appoint a conveyancer early: As a seller, engage a conveyancer as soon as your estate agent lists your property. The estate agent will change the property status from ‘For Sale’ to ‘SSTC’ only after conveyancers for both parties are appointed and the buyer verifies their funds. Early appointment of your solicitor puts you ahead, allowing the conveyancing process to commence swiftly once your buyer instructs theirs.
Leverage a sale-ready pack: A sale-ready pack prepared by your conveyancer can help reduce risk, time and unnecessary costs. While optional in England and Wales, it’s mandatory in Scotland. The pack allows for early problem identification and solution finding, reducing potential delays later on.
Consider reservation agreements: If you’re anxious about a potential transaction collapse, you can instruct your conveyancer to draft an exclusivity agreement, often known as a ‘reservation fee’. This ensures no interruptions with other offers within a specified timeframe for exchange.
Get qualified as a buyer: To boost your offer’s appeal against other potential buyers, get qualified. It shows your capability of seeing the transaction through to completion, reducing the risk of a failed sale during SSTC.
INITIATING A SERIES OF LEGAL PROCEDURES
When a property is tagged as SSTC, it initiates a series of legal procedures spearheaded by the buyer’s conveyancer. This legal professional delves into the property’s legal title, sifting through potential issues and providing practical solutions when possible. The ultimate goal is to ensure the property can be purchased with a good title, securing the buyer’s ability to re-mortgage or sell.
To identify potential problems, the buyer’s conveyancer applies for searches such as Local Authority, Water Drainage, Contamination and Flood, among others, to identify potential problems. They also scrutinise the Land Registry’s legal deeds and draft a contract and supporting documents. These documents can be assembled into a sale-ready pack, which is advisable to order early to minimise risk.
ENQUIRIES, REPORTS, AND CONTRACT EXCHANGE
In addition to these tasks, the buyer’s conveyancer reviews forms filled out by the seller’s conveyancer, including the TA6 property information form, leasehold form and lease management on a lease sale. Once reviewed, the buyer’s conveyancer raises ‘additional enquiries’ with the seller’s solicitor and considers whether fixed or indemnity insurance for defects is available.
Towards the end of the SSTC period, a ‘report on title’ is sent to the buyer. After review, the buyer decides whether to proceed with the purchase. They’ll instruct their lawyers to exchange legal contracts if they decide to buy. Both parties must agree on matters such as the timeframe between the exchange and completion of contracts.
PRICE RENEGOTIATION AND VIEWINGS DURING SSTC
While the property is SSTC, the sale price may be renegotiated if problems arise. A sale-ready pack is beneficial here, as being legally prepared before the SSTC stage means disclosing material information upfront, allowing price adjustments to be made early.
However, issues flagged during the SSTC stage, like those from a surveyor’s report or the legal investigation report, can still trigger price renegotiations. Furthermore, while a seller can allow viewings on their SSTC property, it can be risky as it might lead to potential buyers withdrawing.
Gazumping is when a new buyer makes an offer on a property that’s SSTC, and the seller accepts this new offer. The estate agent is legally obliged to relay any offers they receive to the seller unless instructed otherwise by the seller. WRAPPING UP THE SSTC PERIOD The SSTC period ends upon completion of the transaction. It typically takes about five months from an offer being accepted to an exchange of legal contracts, with an additional five to twenty working days to completion.
This timeframe can vary based on factors like the conveyancer’s resources, market saturation and the time of year. The SSTC stage concludes once the final contract has been signed, exchanged and the deposit paid. The deal becomes legally binding at this point, and anyone who pulls out would face hefty fees.
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