Exchange of contracts is the day when the contract for the sale or purchase of the property is dated and becomes legally binding on both the buyers and sellers. The practical effect is that buyer’s usually must pay a 10% deposit of the purchase price to the seller and a completion date will be set for certain. Any party attempting to back out of the transaction after exchange of contracts will face contractual penalties, such as losing their deposit or owing the other party money in damages.
What happens on the day of exchange of contracts?
On the day of exchange, your conveyancer will telephone the conveyancers acting for the buyer/seller and usually exchange contracts by telephone. You do not have to come into the office; all you will need to do is be able to provide clear authority for your conveyancer to exchange contracts on your behalf. Your authority can be given by telephone or email.
Does the contract have to be signed?
Exchange may only take place once your conveyancer holds your signed contract. However, even though you may sign your contract and return it to us, exchange does not take place until your conveyancer takes the legal steps to exchange contracts. A signed contract is not legally binding until exchanged. We often ask our customers to sign the contract early in the transaction and return them by post so that you do not have to return them last minute when time is running out. The signed contract will then be held until it is needed for exchange.
When will exchange of contracts take place?
Exchange of contracts will usually take place very close to the date of completion.
Once exchange of contracts has taken place, any party not able to complete on the set completion day will be liable for financial penalties. In order to prevent buyers or sellers suffering these contractual penalties, your conveyancer will only exchange contracts when they are satisfied that everything will be in place to complete on the day of completion. Usually this means the following have been confirmed:
- If you are buying with a mortgage, you have your buildings insurance in place and your mortgage company has confirmed that funds will be released in time for completion.
- Any land registry searches have been carried out and the results are satisfactory.
- You have provided your deposit if you are buying.
- You have confirmed to your solicitor that you are happy for the exchange of contracts to take place.
- All other parts of the transaction have been completed; namely the searches have been received, mortgage offer issued and checked, signed documents received, replies to enquiries received from the sellers and all ID and source of funds documents are in order.
- If you are selling, your buyer’s solicitors will only exchange contracts once the items listed above are acceptable.
How long should there be between exchange and completion?
There does not have to be a minimum time between the day of exchange and the day of completion. In fact, sometimes exchange and completion may take place on the same day. As a rough guide, though, exchange of contracts generally takes place between 7 and 28 days before completion.
What happens on the day of completion?
Buyers and sellers do not have to visit their solicitors on the day of completion; which is good because most buyers and sellers will be busy packing and moving into their new home!
If you are selling
The completion date is the day the property legally is no longer yours. It’s an agreed date in your contract when you receive the full purchase price, less any deposit paid. Practically, this is the date you’ll hand over the house keys and move.
On the day of completion, the buyer’s solicitors will send the sale price to your conveyancer and once it is received in their account, then completion is said to have taken place. This means that the property has now been transferred to the buyers. You can then either arrange to give the keys directly to the buyers, or the estate agents will be notified that they may give the keys to the buyers.
If you are buying
The completion date is the day the property legally becomes yours. It’s an agreed date in your contract when you pay the full purchase price, less any deposit paid. Practically, this is the date you’ll receive the house keys and move.
Your conveyancer will send your deposit money and mortgage advance (if you are using a mortgage) to the seller’s conveyancer’s bank account. Once the seller’s conveyancers receive this, they will notify the sellers and estate agents. The keys to the property can then be given to you.
Can completion take place over the weekend?
Completion can only take place on a weekday because the banks and both the buyer’s and seller’s solicitors must take part in the process. Any weekday, save for bank holidays, can be set for completion. Some weekdays may not be appropriate for completion in the run-up to Christmas as some banks and solicitor firms have shorter working times. Your solicitor will discuss the best completion date for your circumstances.
What time does completion take place?
There is no fixed time when completion will take place on your completion date. Completion happens when the purchase money arrives in the seller’s conveyancer’s bank account and the sellers advise the agents/buyers that monies have been received. This could happen early in the morning, noon or later in the day before 5 pm, depending on when the buyer’s conveyancers send the funds and how long the bank transfer takes to process.
Usually, completion will take place by mid-afternoon however, in the event it takes longer, your conveyancer at Lockings Solicitors will be on hand to provide you with information and advice to assist you.
When should completion dates be agreed?
Once your conveyancer has all the information they need regarding your sale or purchase, they will contact you to discuss completion dates. We recommend not agreeing on a date until your conveyancer contacts you to discuss them.
Once a completion date is agreed, sellers and buyers can book their removals and arrange to move with certainty.
More Speed, Less Stress Conveyancing
Lockings Solicitors help make your move as hassle-free as possible.
Follow our tips below to help avoid moving anxiety and to make buying and/or selling a property considerably less stressful:
- If you hear that a party in the chain is ready, don’t believe it until we confirm their position. People often say they are ready to exchange when they aren’t.
- Don’t book removals or make other firm commitments until you know from us that everyone in the chain is ready and can agree on the completion date.
- Allow for a sensible gap between exchange and completion – at least 7 days and preferably 14. In this way, you can make arrangements knowing (not just hoping) that the move will go ahead on the agreed date. It also helps us to make final arrangements, for example obtaining mortgage money. Most lenders need about 7 days’ notice to release funds, and the money has to be used for the purchase immediately. Some lenders may charge up to £100 if the money is sent back and then re-requested; something which can be avoided if there is a gap between exchange of contracts and completion.
- Don’t start thinking about completion dates straight away as it’s impossible at the outset to predict how quickly things will happen.
- If your seller or buyer asks for a date before everyone is ready, be as vague as possible. If you can’t be sure, there’s no point fixing a date that may turn out to be impossible to achieve.
For a no-obligation conveyancing quote contact the team on 01482 595 208.