Exchanging contracts doesn’t sound like a complicated process; but there’s more to it than sending and signing documents. In fact, this is arguably the most important and nerve wracking stages of a house sale; especially when a long conveyancing process puts both parties at risk of the sale falling through.
There are a lot of factors that can delay — or even end — the process of exchanging contracts. So how long does it actually take to exchange contracts? And what can homeowners do to move things along?
Read on to find out!
Exchange of contracts, explained
When a property becomes Sold STC (subject to contract), the buyer and seller both enter into a legal and administrative process called conveyancing. During this period, the buyer will conduct a survey to make sure there are no significant problems with the property; and the solicitors will work to get all of the legalities signed off.
The conveyancing process can take anything from 4 to 16 weeks. Depending on how responsive both parties are, it’s very common to experience delays. The biggest risk during this process is that the sale falls through; either because the buyer has pulled out, or the seller decides to accept another offer.
Exchanging contracts takes place towards the end of the conveyancing process. It’s the act that makes the sale legally binding, so naturally, it can only take place once all of the other paperwork is in order, and there are no outstanding doubts or questions between both parties.
The actual act of exchanging contracts refers to the process of both solicitors swapping documents to signify that an official agreement has been made. Once the contracts have been exchanged, neither party can pull out of the sale without being liable for severe penalties or facing legal action.
After the exchange of contracts, the solicitor will change the names on the Land Registry. If it’s a leasehold property, the buyer will need to let the freeholder know that they’re the new owners. If the buyers have a share of freehold, they’ll need to register their name on the company register.
It’s time to set a completion date. Completion is when the money and keys are exchanged, and the buyer can officially move into their new home.
How long does it take to get from exchange to completion?
All sales are different, and unfortunately, there’s no set time frame between exchange and completion. Usually, this time period is set by both parties once a completion date is agreed. This can take anything between a week to a month. It can sometimes take longer when there are delays with the property chain.
In some cases, exchange and completion can happen on the same day. This is usually the case if the property has been sitting empty for some time, and all stakeholders involved in the conveyancing process are extremely proactive.
Moving this quickly isn’t always possible. Buyers who are purchasing the property using a Help to Buy ISA or equity loan tend to experience more delays between exchange and completion, as transferring the funds takes slightly longer. Some mortgage companies also enforce a minimum time period between exchange and completion — but the conveyancers are usually aware of this ahead of time.
What is delayed completion?
Delayed completion is when a completion date is pushed back, or set for later than it needs to be. Delayed completion can be both intentional, or unavoidable.
In some cases, sellers can request a delayed completion by up to a few months — or even years. Some additional reasons behind requesting delayed completion include:
- The buyer relocating from overseas and needing time to get organised before getting the keys to the property
- Awaiting planning permission (this is especially common if both parties have exchanged ‘subject to planning’)
- The buyers are waiting for the funds from the own sale to be able to complete their ongoing sale
- The property is being let, and the seller is waiting for the tenancy to end before they can officially hand over the keys
- There are delays happening with the property the seller is moving on to
- The property the seller is moving on to hasn’t been built yet
- The buyers can’t relocate until the end of the school year
Sometimes a delayed completion date can be unintentional, and a result of delays in processing. In this case, both parties can run into significant issues — including the sale falling through, or the buyer losing their mortgage-in-principle.
Can you exchange contracts without a completion date?
The short answer is no. Until the buyer and seller have agreed on a completion date, the exchange of contracts cannot take place. This is because the exchange of contracts is legally binding — and the completion date needs to be explicitly listed in the contracts themselves.
Having a set completion date also protects both the buyer and seller in the event of delays that neither party is responsible for. Some solicitors can move slowly if they also have two or three properties on their books. If the solicitors fail to meet the completion date, they can be sued by their clients.
A Summary
The period between exchange and completion can be incredibly anxiety-inducing — especially following a lengthy conveyancing process. If both parties are part of a property chain, everything needs to be timed properly, or the entire chain could fall through (including the sale of the property).
Of course, all sellers want to sell their house as fast as possible — but sometimes, delays in the conveyancing process are out of anyone’s control. However, there are a few things both parties can do to speed the process along, like asking your solicitor for regular updates, and holding them accountable if they’re not moving as quickly as they could be. It’s also important for both parties to be proactive, responsive, and transparent — keeping everyone in the loop of any delays they might be causing, and making sure they’re on the same page about a completion date.
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