Residential property specialist, Victoria Cranwell, explains what happens on exchange of contracts and when you can expect it to happen.
Victoria is available on 01225 462871. Alternatively, you can contact her by email, or by completing the Contact Form at the foot of this page. Conveyancing quotes are also available online.
Exchange of contracts is a significant step in the process of buying a house, representing the point of no return.
What does exchanging contracts mean?
Exchanging contracts marks the point at which the parties are legally bound to complete the conveyancing transaction. The completion date is set and there would be penalties – potentially substantial – if either party pulls out, or completion is delayed for another reason. At exchange:
- Each party’s solicitor will be in possession of a signed contract.
- The buyer’s solicitor will be in possession of cleared deposit funds as well as (if required) a mortgage offer and a buildings insurance policy.
- The seller’s solicitor will also hold the signed transfer of title deed (Form TR1).
Exchange of contracts begins at the bottom of the chain and works upwards. At the point at which the buyer and seller’s solicitors confirm – in almost every case over the phone – that they each hold the legal documents required to complete the transaction, they ‘exchange’ contracts, creating a binding agreement. The deposit monies are transferred to the seller’s solicitor and each solicitor posts their copy of the contract to the other.
Despite being a pivotal day in the process of buying your home, unless you are exchanging and completing on the same day, which is rare, there will be little if anything for you to do on the day of exchange. However, with the certainty that exchange of contracts creates, you can begin finalising your completion day checklist.
What time of day does exchange of contracts happen?
Exchange of contracts typically happens between seven and twenty eight days before completion. While there is no set time of day for it to happen, in many cases it takes place around the middle of the day, allowing the solicitors sufficient time beforehand to ensure everything is in place.