CONVEYANCING

What is Exchange of Contracts?

So, with the 6 key stages of pre contract stuff sorted, you can start to think about exchange of contracts!  This will be the point at which you are legally bound to buy and sell.  Until then, buyer or seller can simply walk away.  It is an aspect of the conveyancing process that many find frustrating.

The 6 key stages to have completed in order for exchange of contracts to happen are:-

  1. ONBOARDING
  2. CONTRACT PACK
  3. SEARCHES
  4. MORTGAGE
  5. SURVEY
  6. ENQUIRIES

And, remember that for exchange of contracts to take place, everyone else in your ‘chain’ must be ready to.  Until they are, you will be stuck waiting.  And, there is nothing your conveyancer or estate can do in reality to speed anyone else up.

Your conveyancer will only exchange contracts with your express permission.  And, before they do, they will have mooted with you a completion date that suits everyone up and down the chain.  Exchange of contracts will generally happen on the same day up and down your chain.  And, the completion date (which is set at exchange) will also usually be the same up and down the chain.

The buyer will normally pay a 10% deposit to the seller on exchange of contracts, with the balance being paid on the day of completion.

Exchange of Contracts FAQs

Exchange of contracts is the point in a conveyancing transaction when buyer and seller become legally bound, and ‘completion’ day is set (the day your actual move happens).

The Solicitors for buyer and seller exchange contracts by telephone but then send the original documents to each other by post either that evening or the following day.  In the (very distant) past, solicitors would invariably get together to physically exchange contracts there and then!

No, you do not have to be there when exchange of contracts happens.  The solicitors for the buyer and seller deal with it on their behalf.

Yes, your solicitor deals with exchange of contracts on your behalf.

Exchange of contracts will only happen once the following are all in place, and you have given your solicitor clear instructions to go ahead and exchange contracts.  Broadly speaking, these matters need to be dealt with:-

  • Searches – done and ‘reported’ to you without issues
  • Mortgage – firm offer in place
  • Mortgage valuation – done
  • Survey – you should always have a full survey to check what you are buying (this is different to a mortgage valuation)
  • Contract Pack – your solicitor will have checked the legal title to the property and reported to you
  • Pre Contract Enquiries – these will all be complete to your satisfaction and that of your solicitor

Then, and ONLY then can you exchange contracts!

Exchange of contracts is a quick and relatively simple process done by telephone.

As a rough guide is generally takes 8-12 weeks to get to exchange of contracts.  This varies depending upon your particular circumstances, and often is held up by other transactions in your ‘chain’.

Your solicitor will only exchange contracts once all ‘pre contract enquiries’ are complete, and your mortgage and survey are done and all OK.

Completion day is the day your actual move takes place.  This is different to exchange of contracts.  Completion happens AFTER exchange of contracts.

No – exchange of contracts and completion day are two totally different things.

The time between exchange of contracts and completion day can be anything from same day to around 4 weeks.  New build properties (that are not yet completed) may include a long stop completion date months after exchange of contracts.

Before you are ready to exchange contracts all ‘pre contract enquiries’ must be completed, your mortgage in place, and your survey done (without issues you are concerned about).

Once exchange of contracts has happened you are legally bound to complete and significantly, the completion date (the day of your move) will have been set.  Your solicitor will send your part of the contract to the other sides solicitor, and the buyer will have paid the 10% deposit.

Between exchange and completion you can ready yourself for the big move day:-

  • Book removals
  • Plan to notify people such as broad band providers
  • Apply for annual leave (if you work)

You can, but our advice is that you do NOT book removals until exchange of contracts has happened.  The reason is that your purchase/sale is not confirmed legally until and after exchange of contracts.  This is a great frustration for many people when moving.

You can, but given that the sale is only ‘firm’ once exchange of contracts has happened we would always advise that you do NOT give notice on your rental until and AFTER exchange of contracts.

Yes, the conveyancing deposit is paid (between solicitors) on exchange of contracts.

You should indeed budget to find 10% of the purchase price and expect to pay this on exchange of contracts.  HOWEVER, it is common practice for the equity in your sale to be used in lieu of your deposit, and/or for the deposit from the bottom of the chain to ‘go up the chain’ too.  So in practice, it is rare to have to find the cash to pay the full 10% deposit.  This will depend on your particular circumstances and the chain you are in (if you are in a chain).  Your conveyancing solicitor will advise you on this in the run up to  exchange of contracts.

Normally a 10% deposit is paid by the buyer on exchange of contracts.

No!  Once exchange of contracts has happened buyer and seller are legally bound to complete.  The buyer pull out (technically) but in doing so they will be in breach of contract and liable to meet the reasonable costs incurred by the seller.

Yes, the buyer can pull out of the purchase at any point up to exchange of contracts and the seller can do nothing about it.

Yes, the seller can pull out at any point right up to exchange of contracts and the buyer can do nothing about it!

Nothing!  And, this is perhaps the most frustrating part for people trying to move house in England & Wales.  Until exchange of contracts, either party can pull out without any consequences.

They can, but they will be breach of contract and liable to meet the reasonable costs incurred by the buyer in the fact that the sale did not ‘complete.

Yes!  Once you have exchanged contracts you are legally bound to ‘complete’ the sale/purchase.  Exchange of contracts is the point of no return!

If you do not complete after exchange of contracts you will be in breach of contract.  You are liable to lose the deposit and also potentially to reimburse the other party in related costs they suffer too.

Generally speaking, your own exchange of contracts will only happen when everyone in your ‘chain’ is ready to do the same.  This can be very frustrating if you are ready, but others in the chain are not!  Exchange of contracts will therefore usually happen on the same day up and down the chain, and the completion day is set (usually) to be the same for everyone (in the chain) too.

If you have any questions about Exchange of Contracts, or any other of the conveyancing steps, please reach out to our team of expert conveyancing solicitors who will be happy to help!

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Onboarding

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Exchange of
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Report
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