What Happens When You Exchange Contracts in the Homebuying Process
The exchange of contracts is a crucial milestone in the homebuying process. During this stage, conveyancers exchange signed contracts ensuring that each party receives their copy. Once both parties have received their signed contracts, the sale becomes legally binding.
In this article, we’ll guide you through the process of exchanging contracts, covering key aspects such as what happens when contracts are exchanged, the role of conveyancers, and what to expect after the exchange.
What Happens When Contracts are Exchanged?
The exchange of contracts is a process where both parties agree to the conditions of contract. The process involves:
- Both parties agreeing to the conditions
- Signing respective contracts
- Buyer’s solicitor collecting deposit and mortgage offer
- Setting a completion date
- Exchanging contracts and documents
After exchanging contracts, both parties are legally bound to the sale and completion date. Before exchanging, either party can change their mind and pull out, but if they breach the contract after exchange, they may face severe financial penalties.
How Do Solicitors Exchange Contracts?
Your conveyancers will handle the exchange of contracts on your behalf.
After agreeing on the terms, a completion date is set, and each party in the property chain agrees to the finalised terms. The conveyancer then sends the signed contract to their client, marking the “exchange” of contracts. A deposit of 10% of the property price is typically required, although this can vary.
To exchange contracts, you must:
- Have an agreed offer with an included TA10 fixtures and fittings form
- Receive a mortgage offer and proof of funding
- Obtain property search results and review them
- Understand all contract and paperwork details
- Have all signed paperwork from your conveyancer
- Agree on a completion date
These milestones must be completed before exchanging contracts. The exchange of contracts and completion are two distinct stages in the property buying process. Exchanging contracts is the point at which both parties sign and agree to the legal documents, making the sale legally binding. Completion, on the other hand, is the date when the buyer and seller physically transfer ownership of the property and move into their new home.
While it’s possible to exchange and complete on the same day, it’s a rare and complex process that requires meticulous organisation. In most cases, the exchange and completion process takes several days to weeks, especially when a mortgage is involved. If you’re considering pulling out of a property purchase after exchanging contracts, be aware that it can come with significant consequences, including the possibility of being sued and facing added costs.
Speeding Up the Process
To expedite the exchange process, avoid property chains to minimise dependencies, opt for a reputable, regulated conveyancer, and secure a mortgage early with an “agreement in principle” to streamline proceedings.
After contracts are exchanged, buyers must pay funds, send title deeds to their lender, confirm the completion date with movers, pack, and update utility companies. Sellers should ensure the property matches the contract description, book movers, pack, update utilities, arrange mail redirection, and leave keys with the estate agent.
About Thursfields
Thursfields Residential Conveyancers are here to assist you with your move, ensuring a stress-free experience. To access conveyancing support, get in touch with Our Residential Property team on 0345 20 73 72 8 or info@thursfields.co.uk
