Subject to Contract

This is a simple expression which used to be critically important – it means that offers and proposals about buying or selling property are made tentatively and are not at that stage intended to be firm commitments. The addition of the expression ‘Subject to Contract’ was then a crucial safeguard as it prevented any memorandum or other written documents being cited as evidence that a verbal contract was in existence. This possibility was set out in Section 40 of the Law of Property Act 1926 and not finally repealed until legislation in 1989 which stated that any contract for the sale of land must now be in writing. The provisions are changing again with the Land Registration Act 2002.

That said, endorsing a preliminary offer for a property as being ‘Subject to Contract’ is still an idea but it is no longer so critical. In effect, the phrase is a shorthand note that the offer is not intended to be binding at that point in time. The other advantage is that everybody knows what you mean by it.

When you write any letters to your estate agent, solicitors or others involved, it is a simple matter to include the phrase at an appropriate point in the correspondence, or at the top of the letter. But nothing matters if you leave it out.