The exchange of contracts sounds like it should be a simple part of buying and selling a house, but things don’t always go as expected. This can put a damper when the end is in sight, but knowing what this part of a home sale entails can help prepare you for the unexpected.
In the following guide, we’re going to take a close look at all the details involved in the exchange of contract, and what your solicitor will and won’t do.
The exchange of contracts is the stage where solicitors working on behalf of the buyer and seller swap the documents that show the sale has been agreed between both parties.
The completion date is the date that the buyer can move into their new home. The keys for the property are likely to be with the buyer’s estate agent and will be ready to pick 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 move-in date is agreed.
The time between the exchange of contracts to the completion date is usually around a 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.
Some believe the process of exchanging contracts is a little dated, but neither the buyer nor the seller is legally bound to follow through on an offer made before the exchange of contracts. This changes once the exchange of contracts 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 a rare occurrence. 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.
The process of exchanging contracts requires very little input from the seller or the buyer. The solicitors of both parties will handle the process and this will usually entail a recorded phone call where the contracts are read out loud by both parties to make sure they are the same and line up.
When the contracts are exchanged, the buyer is legally bound to purchase the property. Next, leaseholders will need to tell the freeholder that they are the new owner of the property. Then, you will need to check that whoever has dealt with the transfer of ownership (whether it is the solicitor or conveyancer) has done so by checking the land registry.
A solicitor will next make the arrangements for a new share certificate, if you are owning a share of a freehold property.
This is one of the last stages, and then the solicitors post the contracts to one another to make the exchange official.
A solicitor will usually tell you (their client) when the exchange of contracts is happening and many will also make a courtesy call so you are 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.
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, as already mentioned, 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.
It is moving day and the money should have been officially transferred from the buyer to the seller. As a buyer, all you need to do is pick up your keys and move in.
At this stage, you should have already made sure you have the correct deposit and understood the terms and conditions of the mortgage. 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.
Click on this link for our full house selling checklist.
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