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What does exchange of contracts mean?
Contracts exchanged is one of the final stages in buying a house. The buyer and seller sign and swap contracts agreeing to the conditions of the sale, including the deposit.
Once the contracts are exchanged, both parties are legally bound to the agreement. If either party chooses to pull out, there can be serious financial consequences. The completion date is then agreed upon, and the keys are handed over to complete the sale.
When you reach the point of exchanging contracts, you can start to feel confident that your property deal might come through. Both the buyer and seller have legal recourse if the other pulls out, meaning they can sue each other for damages.
Reaching the exchange can be difficult, and various things can cause delays during the conveyancing stages.
This post details what can happen as you draw close to exchanging contracts and what you can do to help ensure things run smoothly.
What needs to be done before exchange of contracts?
To be ready for exchanging contracts, there’s a lot to accomplish. That’s why it typically takes about 8 to 12 weeks from when you receive a mortgage offer as a buyer to the exchange of contracts. Before the exchange of contracts, you should:
- Conduct any property surveys necessary.
- Obtain a written mortgage offer from your mortgage provider.
- Arrange the funds for your deposit.
- Notify your solicitor of any concerns you have about the property.
- Inform your solicitor if you are participating in any government schemes, such as a Help to Buy ISA.
- Coordinate a building insurance policy to commence on the day of exchange.
The seller should:
- Collect all pertinent paperwork for the property.
- Fill out any forms related to the property, such as a property information form (TA6).
The buyer and seller should:
- Determine if any repairs noted in surveys are to be addressed before completion.
- Reach an agreement on any changes to the house price.
- Decide which fixtures and fittings will be included in the sale.
- Settle on a completion date for the sale.
- Review and agree to the contents of the contracts.
- Finalize the agreement on a completion date.
What can hold up exchange of contracts?
These are the key factors that could hold up the exchange of contracts:
- Ongoing disagreements – If you and the seller are still unable to settle on the price of the property, any required repairs, or which fixtures are included, it can be challenging to agree on the terms of the contract.
- Buyer or seller causing delays – If you are taking your time to prepare everything listed above, it’s unlikely the sale will be able to move forward until everything is done.
- Scheduling clashes – Both you and your solicitor need to be available to exchange contracts, so if you’re unable to find a date that works for both of you, it can hold up the process.
- External factors – If you’re waiting to get your mortgage in writing, or the seller is in a buying chain, the exchange of contracts might have to wait until both parties are ready.
What happens after exchange of contracts?
The exchange of contracts is followed by the completion day, where the seller hands over the keys and the buyer’s solicitor transfers the remaining money.
Before completion, there are a couple of last things to do:
- Schedule a removal company or enlist the help of your friends to assist with your move.
- If you’re purchasing a leasehold property, ensure you inform the freeholder about your new ownership.
- Verify with your solicitor that they have officially registered the transfer of ownership with the Land Registry.
Completion days typically occur within a range of 7 to 28 days after the exchange of contracts. However, certain factors can cause delays in the process. It is important to note that these delays can vary and may impact the overall timeline.
It is crucial to be aware of these potential delays and consider them when planning for the completion of a transaction. By understanding and addressing these factors, individuals can ensure a smoother and more efficient process.
- If you and the seller have agreed that any repairs will happen before the completion day, they must be finished before setting the completion day.
- If the seller is part of a long chain, everyone in the chain must agree on the completion day, which may lead to delays.
- Each transfer of funds in a chain will occur sequentially, meaning longer chains may take more than a day to complete.
Completion days tend to be on Fridays, but solicitors and moving companies are busy on these days. Completing earlier in the week can save time and money.
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If you’re looking to sell quickly, we’ll offer you a reasonable price and a completion date to suit you. Contact Property Saviour now to learn more.
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- The price we’ll offer is the price that you will receive with no hidden deductions.
- Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
- These valuations or surveys result in delays and price reductions later on.
- We are cash buyers. There are no surveys.
- We always provide proof of funds with every formal offer issued.
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- No long exclusivity agreement to sign because we are the buyers.
- You are welcome to use your own solicitor.
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- We share our solicitor’s details and issue a Memorandum of Sale.
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