What does sold STC (subject to contract) mean?

What does sold STC (subject to contract) mean?

When browsing through property sales listings, you will often see properties marked ‘sold – STC’. But what does this mean for buyers and sellers, how long does a property have this status and does this mean the property will always be sold?

At a glance - what does sold STC mean?

What does sold STC mean when buying a house?

Sold STC (subject to contract) is when a seller has accepted an offer to buy their property, but before exchange of contracts. The estate agent should take the property off the market, put up a ‘Sold: STC’ sign outside the property and describe the property in online listings as ‘Sold STC’.

There is, however, nothing legally binding about ‘Sold STC’ in England and Wales. It is an informal acceptance by a seller of the price offered for a property by a prospective buyer. Buyer and seller can both change their minds. If higher offers come in, an estate agent is legally obliged to pass them on to the seller. The buyer can also renegotiate the price or withdraw their interest in buying the property. It is only when contracts are exchanged that the purchase becomes legally binding.

What is the difference between ‘under offer’ and ‘sold STC’?

When a property that is up for sale is described as being ‘under offer’, it means that an offer has been made by a prospective buyer. The sellers are considering it but not yet decided whether to accept it. Buyers can still make other offers. ‘Sold STC’ means that an offer has been accepted but contracts have yet to be exchanged.

What happens after a property is sold STC?

Once a property is sold (subject to contract), the legal aspects of the property transaction can begin. Buyers will apply for their mortgage and normally arrange for a survey to take place. The conveyancing solicitors will conduct searches and prepare draft contracts to be signed by both parties.

How long does sold STC take?

There are no hard and fast rules for the length of time the sold (subject to contract) stage takes in the buying process. It will take as long as the financial and administrative aspects of the conveyancing process take to be put in place – such as the survey, the searches, the mortgage application, itemising the fixtures and fittings in the property. This might take anything between 6-12 weeks depending on the complexity of any issues found.

Is sold STC legally binding?

No, sold STC has no legal obligations or conditions. There is nothing stopping a buyer making offers on other properties, or sellers accepting higher offers if they receive them.

Can a sold STC property sale still fall through?

Yes. There is nothing guaranteed about a property completing after it has sold STC. In fact, 25% of all prospective purchases that reach under offer or Sold STC fall through. Sellers can still consider higher offers than the one they have accepted. Buyers can withdraw their original offer, without having to explain why or there being any financial penalties.

What causes a property sale to fall through after sold STC?

There are any number of reasons why a property purchase would fall through after it has reached the ‘sold (subject to contract)’ stage:

• A buyer has their mortgage application rejected
• The survey reveals a major problem with the building which will be expensive to resolve
• A legal search has revealed planning issues about the area that may be disruptive, eg. A proposed housing development or industrial site
• The buyer has had a change of circumstances that means they are unable to proceed
• Another transaction in the property chain has fallen through

Can a seller accept another offer after sold STC?

Yes, they can. This is called ‘gazumping’, and while frowned upon there is nothing illegal about it.

Can you still view or offer on a house sold STC?

Yes, buyers can still contact estate agents with offers on houses that are sold STC, and estate agents are legally obliged to pass these onto the seller. Estate agents can continue to conduct viewings for properties sold STC, although generally they do not unless otherwise instructed by the seller.

Can you still live in a house sold STC?

No, you can’t move into a house while it is still at the Sold STC stage. Contracts must have been exchanged and completed. When contracts are exchanged deposits are paid and there are major legal and financial implications in either buyer or seller pulling out.

How to reduce the risk of a sale falling through?

It is difficult to reduce the risk of a property sale from falling through before contracts are exchanged and the purchase becomes legally binding. If you are the seller, matters are beyond your control to some extent. What you can do, as a seller, is ensure that all the legal paperwork (and any guarantees or warranties) is provided on time, price your property accurately and ensure the seller is aware of any defects with the property at an early stage. That will help with any price negotiations that may need to take place.

What does ‘subject to contract’ actually protect?

‘Sold STC’ is a stage of the house buying process that protects either party from entering into any legally binding agreements without due consideration or pause. It is a period where buyer or seller has the time and the right to walk away if they want to, without making any legal commitments.

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