The term STC is an abbreviated form of ‘subject to contract.’ Some might find this term to be quite confusing when it is mentioned below the words ‘sold’ in a property sign for sale. However, it is quite essential to interpret not only the meaning but also its significance.
The phrase sold subject to a contract signifies that the property has been presented and accepted for sale. However, no documents have been drafted or money exchanged; it is just a verbal agreement.
Thus, there are no legal restrictions or paperwork, only the offer has been accepted, or the sale has been agreed to. In most parts of the United Kingdom, the sold STC is a common process in the property sale; once the offer is accepted, it becomes enforceable by the law.
What does Sold STC mean in the UK?
Does the sold STC guarantee the sale of the property?
No, the sold STC is not a guarantee to selling the property; there might be chances of withdrawal from the buying party. For instance, if the buyer or the seller changes their mind or the valuation survey has raised any issue, either of the parties can stop the process.
Since there is no legal document binding them. It can have its advantage, as it might save the buyer or the seller from getting involved in a non-negotiable sale or other issues. It is only appropriate to get a new buyer or seller with better terms and offers in such circumstances.
Significance of sold STC for a buyer
As a buyer, once you have accepted an offer of sale from the seller, it’s time for you to consider your mortgage and ask your concerned agent or lawyer to do a background check of the house and find out the unknown facts if any.
The sold STC stage is a beneficial stage for the buyer. It gives them an opportunity and extends the time to gather more information about the property development before getting its legal ownership.
However, as a drawback, this process can become quite tedious and long in some home sales, which might delay the legal paperwork. Under any circumstances, as a buyer, it’s your right to be informed and updated from time to time.
Significance of sold STC for a seller
As a seller, once you have received an offer and almost finalized it, your property can be considered as the sold STC. Therefore, your current property listing status will be changed to sold subject to contract.
It means that the signboard in the front of your commercial property with the words ‘for sale’ will now be upgraded to ‘sold STC.’ You will now have to inform your lawyer to begin the ownership transfer process.
During this process, you will get a lot of signs of whether your buyer is interested or not. It is an advantageous step as you can also consider other offers.
In case you find a better buyer, you can simply call off the previous one. Contrary to this, if the buyer denies the offer, the sale extends further, which can be a drawback.
Is it illegal to stop a buyer from buying the house if it’s under-sold STC?
Although preventing someone from buying the property is an unfair task, it is not illegal. This phenomenon is considered ‘gazumping.’ This can be done in various ways.
A seller can choose the buyer with the higher offer and change its agreement with the previous buyer, or the real estate agent can enlist the name of certain buyers and contact them in case the deal falls through with the previous buyer.
However, it is quite unfair for the buyer as they have to incur the loss of the money spent on inspections and lawyers.
At this point, a question might arise in your mind if there are so many risks of being gazumped, then what is the significance of sold STC. Well, the cases of gazumping are smaller than the benefits of the sold STC.
With the old STC, there are a variety of options available for both parties; they can either withdraw in the middle, at the same time, it also gives a sense of protection to the buyers.
Considering the worse scenarios, in case any issue is spotted during the survey, you will have an opportunity to cancel the deal without any hesitation.
Ways to avoid the phenomenon of gazumping
You can avoid being gazumped in various ways. For instance, the moment you accept a deal or offer, request the real-estate agent to pull off the property from the market.
It will prevent any other offers from arising. Not only should they strike off the property from their list, but also any other advertising platforms.
Also, the board on the front door should be changed from ‘for sale’ to ‘sold.’ This can prevent the attention of other potential buyers.
If these steps do not give a sense of assurance to you, then you can also seek the assistance of insurance curated specially for the financial losses faced when a property’s sake falls through.
Sold Subject to Contract is a beneficial factor for both the buyers and the sellers. This stage ends only when the legal documents are read and signed off by both parties. Once you have signed the documents, a date is fixed on which the keys are handed over to you.
To complete the legal process, the buyer has to deposit at least 5% to 10% of the total amount. Moreover, once the contracts have been exchanged, you are considered a legal owner of the home.
Withdrawal from a sale after the exchange of contracts can lead to high fee payment. Thus, most people take their final decisions during the sale subject to the contract phase.
Irrespective of these buying stages, make sure that you seek assistance and advice from a reliable real estate agent who can keep you informed and updated about future developments.