Exchange And Completion
At this point, and not before, the transaction becomes legally binding.
Written by: Richard Antrobus Category: Buying, Selling April 4, 2020
What is exchange and completion?? – Exchange of contracts happens when a deposit is paid and the transaction becomes legally binding. You may have had an offer on a property accepted but until you have exchanged contracts, your move is not yet guaranteed. Here is our guide on what is involved in exchanging contracts and completing on your new home.
What Does It Mean To ‘Exchange Contracts’?
When contracts are exchanged it means both the buyer’s and seller’s solicitors swap the signed contracts and the buyer pays the deposit. At this point, and not before, the transaction becomes legally binding. In other words, exchanging on your house occurs and no one can change their mind, without penalties being incurred.
Exchanging Contracts On A House: What Happens?
Once an offer has been accepted, there are several things that need to happen before exchange of contracts can take place.
If you are the buyer you should:
- Inform your conveyancing solicitor of your intention to purchase the property. Ideally, you will have sought a number of conveyancer quotes in advance and know who you are going to instruct.
- Conveyancing quotes will vary from one transaction to another and each will depend on a number of factors.
- Organise a survey to examine the property and identify any defects that would affect the property’s value. If the survey shows any faults you might be able to negotiate repairs or a reduced price with the seller depending on what has been discovered.
- Get a copy of your mortgage offer
- If the property is leasehold, or a share of freehold property, examine the lease and raise any questions or concerns with your solicitor
- Take out buildings insurance. This must be in place from the date of exchange
- Tell your solicitor when this is done and let them know your policy number
- When your solicitor or conveyancer sends you the results of the searches, ask them to explain anything that concerns you or them
- Sign the contract and complete any other documents
If you are the buyer, your solicitor or conveyancer should:
- Ensure that any repairs that you negotiated with the seller have been documented in the contract
- Order local searches to be carried out which check for any nearby planning or environmental issues
- Raise any issues on your behalf relating to the searches
- Check over the contract and forward it to you for signing
- Agree on dates for exchange and completion with the seller’s conveyancing solicitor
- Arrange to transfer your deposit
If you are the seller you should:
- Collect all paperwork relating to any work that has been done on the house, whether it was done by you or the previous owners. You might need to supply proof of planning permission, building regulations etc. If the property is leasehold, you will need a copy of the lease
- Complete all necessary forms which should have been forwarded to you by your conveyancing solicitors. This will include property information (TA6) and fixtures and fittings forms (TA10)
- Contact your buildings insurance provider to tell them that you are you’re moving and cancel your policy
- Arrange a new policy for the property you are moving into, starting on the date of exchange
- Ask your mortgage provider for a mortgage statement/settlement figure and secure finance for your new home
If you are the seller, your solicitor or conveyancer should:
- Ensure all the relevant paperwork has been completed by you and send it to the buyer’s solicitor
- Answer any queries raised by the buyer’s conveyancer
- Get hold of all paperwork including the title deeds and the sellers mortgage figures
- Write up a draft contract for the sale
- Agree on a date of exchange and completion with the buyer’s solicitor
When Do I Exchange?
Exchanging on a house is the point of no return. Once all the paperwork is in place and the buyer and seller have signed identical contracts, they can be exchanged and deposits are paid. This will happen at a set time after which, your agreement becomes legally binding. After exchanging on your new house, neither party can back out without suffering major financial penalties.
Exchange usually occurs over the phone by both solicitors reading out the contracts which are then immediately mailed to one another. A hold-up anywhere along the chain could delay everyone in that chain.
How Long Does It Take To Exchange And Complete?
A fairly quick and straight-forward transaction would take around 2 – 3 weeks from enquiries to exchange of contracts. This is the best case scenario. A more typical transaction will take between 4 – 8 weeks after completion of enquiries. Many take longer.
When contracts have been exchanged, a completion date will be set. Solicitors can be sued if they do not meet this date so you can be fairly certain you will complete then. Completion dates are often two weeks after exchange as a guideline.
Exchanging and completing on your property sale or purchase is a complex series of events, our professional team at VitalSpace endeavour to help throughout the process and keep up to speed with developments with your chosen legal representative.
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