What does sold subject to contract actually mean?
There can be a lot of confusing terms when you are buying and selling property, particularly if you are a first-time buyer. Our guide helps explain what one of the most important means and the rights it gives you.
What does 'sold subject to contract' mean?
Sold 'subject to contract' (STC) indicates that a property has an agreed sale price and that key terms between the buyer and seller are in place, but the sale is not yet legally binding because contracts have not been exchanged.
During this period, which usually lasts several weeks, both parties undertake necessary steps to finalise the sale. These include surveys, mortgage arrangements, and legal processes.
While the seller can still entertain other offers, they are obliged to inform interested parties that the property is sold subject to contract. The buyer also has the option to withdraw from the sale without penalty.
Once all conditions are met and contracts are exchanged, the sale becomes legally binding, and the property is considered sold.
What does it mean for the buyer and the seller?
As a buyer, 'sold subject to contract' means:
You've agreed on the sale price and key terms with the seller, but the sale is not yet legally binding
During this period, you have the opportunity to conduct surveys, arrange a mortgage, and complete legal due diligence
You're not obliged to proceed with the purchase until contracts are exchanged, allowing you to withdraw from the sale if necessary
Until contracts are exchanged, the property remains available to other potential buyers, and the seller can consider alternative offers
As a seller, 'sold subject to contract' means:
An agreement on the sale price and terms has been reached with the buyer, but the sale is not yet legally binding
The seller can continue to market the property until contracts are exchanged, as the sale is not guaranteed
The seller should not accept other offers without informing potential buyers that the property is already subject to a sale agreement
The seller should cooperate with the buyer's requests for surveys, inspections, and other due diligence activities to facilitate the sale process
Until contracts are exchanged, the seller should be aware that the sale may not proceed, and they may need to remarket the property if the sale falls through
Can I make an offer on a house that is sold subject to contract?
Yes, you can make an offer on a house that is sold subject to contract, but understand that the property already has an agreed-upon sale price and terms with another buyer.
Your offer should be considered a back-up offer in case the current sale falls through. The seller can choose to accept your offer if the existing sale doesn't proceed, but they must inform you that the property is subject to contract.
Until contracts are exchanged, the sale isn't legally binding, leaving room for alternative offers.
Whose responsibility is it to mark that a property is sold subject to contract?
In the UK, it's typically the responsibility of the seller's estate agent to mark a property as sold subject to contract once an offer has been accepted by the seller.
The estate agent updates the property listing to reflect its status as STC, indicating to potential buyers that an agreement has been reached but contracts have not yet been exchanged.
The buyer's or seller's solicitor may also inform relevant parties of the property's status during the legal process leading up to the exchange of contracts.
Can I accept a better offer if the property is already marked as sold subject to contract?
Sellers can still consider offers on a house that is sold subject to contract, but any new offers should be considered back-up offers because the property already has an agreed-upon sale price and terms.
If the seller breaks off the ‘sold subject to contract’ agreement in favour of a better offer, it is bad practice and often called gazumping.
Partly because of this risk, the process differs slightly in Scotland. Once an offer is accepted north of the border, the property is usually marked as under offer.
While it is similar to subject to contract in England and Wales, ‘under offer’ in Scotland means the seller cannot legally accept any further offers unless the sale falls through.
This system provides more certainty for buyers and sellers in Scotland regarding the status of the property.
How long does it take to complete a sale on a house that is sold subject to contract?
The timeline for completing a sale on a house that is sold subject to contract in the UK varies.
On average, it typically takes around eight to 12 weeks from the point of agreeing on the sale price and terms to exchanging contracts and completing the sale.
This timeline can be influenced by factors such as the complexity of the sale, the efficiency of solicitors, and any unforeseen issues that may arise during the process.
Additionally, delays can occur if surveys, financing, or legal processes take longer than anticipated.
What other terminology such as sold subject to contract should I be aware of?
There are a few terms to be aware of when buying property, particularly if you are a first-time buyer. These include.
Freehold. This means you own both the property and the land it sits on outright, with no time limit on ownership. It's common for houses, giving you full control over the property
Leasehold. You own the property but not the land it's on, usually for a fixed period. Common for flats, it often involves paying service charges to the freeholder
Subject to survey. Indicates that your offer is dependent on a satisfactory survey report, ensuring the property is in good condition and worth the price
Exchange of contracts. This is the point where the sale becomes legally binding, and both buyer and seller commit to completing the transaction according to the agreed terms
Completion. The final stage of the sale process, where ownership of the property transfers from the seller to the buyer, and the remaining balance is paid
Other useful guides
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