When selling a house, exchanging contracts doesn’t always go to plan.
Understanding this stage of a sale can help prepare you for the unexpected.
In the following guide, we’ll examine all the details of exchanging contracts and what your solicitor will and won’t do.
What does the exchange of contracts mean?
The exchange of contracts is the stage where solicitors working on behalf of the buyer and seller swap the documents proving that the sale has been agreed upon between both parties.
What is the completion date?
The completion date is when the buyer can move into their new home.
The property keys will likely be with the buyer’s estate agent, who will be ready to pick them up on this day.
In an ideal scenario, all members of the chain complete at the same time.
When this is not the case, the buyer may have to wait for the seller to complete buying their next property before the agreed move-in date.
How long is the stage between the exchange of contracts and completion?
The time between the exchange of contracts and the completion date is usually around one week.
Other parties in the chain can impact this date, such as the seller waiting for a move-in date on their next property.
This will often influence the moving-out date, which, in turn, pushes the completion date back further.
Why is an exchange of contracts necessary?
Some think exchanging contracts is a little dated, but neither the buyer nor the seller is legally bound to follow through on an offer before exchanging contracts.
This changes once the contract exchange has occurred.
If either party decides to change their mind after the exchange of contracts, they will face steep penalties where they compensate the other party.
Most people will not have to worry about this, though, as it is rare. This is why the exchange of contracts is such a crucial stage for most sellers.
Once this stage is complete, it is highly unlikely that the sale does not go through.
How do I exchange contracts?
The process of exchanging contracts requires very little input from the seller or the buyer.
Both parties’ solicitors will handle the process, which usually entails a recorded phone call during which the contracts are read aloud to ensure they are the same and line up.
The buyer is legally bound to purchase the property when the contracts are exchanged.
Next, leaseholders must tell the freeholder that they are the property owner.
Then, you must check that whoever has dealt with the transfer of ownership (the solicitor or conveyancer) has done so by checking the land registry.
If you own a share of a freehold property, a solicitor will arrange for a new share certificate for the sale.
This is one of the last stages, and then the solicitors post the contracts to one another to make the exchange official.
Will my solicitor tell me when we exchange contracts?
A solicitor will usually tell you (their client) when the exchange of contracts is happening, and many will also make a courtesy call to keep you well informed.
Before signing the exchange of contracts, be sure that you wish to go through with the process, as it is legally binding once the contracts have been exchanged.
What happens when the contracts have been exchanged?
Once the signed contracts for a house sale have been exchanged, it is cause for celebration.
This is as long as you have your completion date, which should be around a week from the exchange of contracts.
Now it is time to prepare for the move by packing, making arrangements for removals, and changing your address where necessary.
What do I need to do on completion day?
It is moving day, and the money should have been officially transferred from the buyer to the seller.
As a buyer, you need only pick up your keys and move in. You will receive several documents in the following weeks.
At this stage, you should have ensured that you had the correct deposit and understood the mortgage terms and conditions.
You should also have agreed on a completion date, checked the Energy Performance Certificate (EPC), and asked your solicitor if there are any elements of the contract that you do not understand.
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