What does exchange of contracts mean?
Exchange of contracts is simply the name given to the time when the two solicitors working on behalf of the buyer and the seller swap documentation to signify an agreement has been reached between both parties with regard to the property sale.
Why do we need to exchange contracts?
Although many have called for an overhaul of the process, the fact remains that neither party are legally bound to any offer made prior to contracts being exchanged. Once an exchange of contracts has been made, however, this changes.
Should either the buyer or seller decide to pull out after the contracts have been exchanged, they will likely be liable for severe penalties to compensate the other party. This is not something that occurs very often, though, so once exchange of contracts has happened everyone can breathe a sigh of relief
When do I exchange contracts?
Exchange of contracts should only happen once every i is dotted and t crossed. This process makes the agreement legally binding, so it’s vital to ensure everything is in order before pushing ahead.
Your conveyancing solicitor should make sure you have covered every eventuality before the contract exchange takes place, but some essentials include:
- You have made an offer and it has been agreed
- You have inspected the relevant Law Society forms, such as the Property Information Form & Fittings and Contents form
- Surveys have been carried out
- Valuation has been conducted by your lender
- Searches have been completed by your conveyancer
- The EPC has been checked
- Funding is in place to pay the deposit
- A completion date has agreed upon (this will form part of the contract)
- Buildings insurance put in place (you are liable for the property from the moment contracts are exchanged)
- You have taken the time to read through the contract, and ask any relevant questions
- Once read and understood, the contract should be signed
What is the timeframe for exchange of contracts and completion?
In most instances, exchange of contracts will usually take place anywhere between one to four weeks prior to completion date. It is, however, possible to exchange contracts and complete on the same day, but it’s not for the faint of heart.
Exchanging contracts and completing on the same day opens you up to all sorts of potential headaches, such as having everything packed ready to move without knowing for certain that the move will actually happen! Some lenders may not even agree to it, as many will have a minimum timeframe of five working days between contracts being exchanged and completion day.
What happens once contracts have been exchanged?
Once contracts have been exchanged your completion date is virtually set in stone and you can start to prepare for your move.
What happens on completion day?
Otherwise known as moving day, completion day is where the money is transferred from buyer to seller, keys are handed over, and the move takes place.
If you require any further assistance then please contact a member of our conveyancing team who will be happy to assist.
