Here’s what you need to know.
What is the exchange of contracts?
Property lawyers used to meet in person to physically exchange contracts. These days, it’s more likely to happen over the telephone.
The exchange of contracts is when the property transaction becomes legally binding.
It’s very rare that either the buyer or the seller would pull out after exchange as they'd have to pay severe penalties or face legal action. The contracts also include your agreed date of completion, so you can finally book that moving van!
What happens when you exchange contracts?
If you’re almost ready to exchange, you need to read (and make sure you understand) the contract, then sign it.
You and the seller sign identical contracts. Then your solicitors read the contracts to each other over the phone to confirm that they're indeed identical.
The solicitors then check that they have all the relevant legal documents, and verify that any other buyers and sellers in the chain are ready to proceed.
The solicitors then exchange contracts over the phone.
Congratulations, your home purchase is now legally binding!
How long does it take between exchange and completion?
It usually takes around two weeks between exchange and completion, but this varies.
Can I exchange and complete on the same day?
Yes, you can exchange and complete on the same day. However, this doesn't happen often.
Can you exchange contracts without a completion date?
No. You must include a completion date in your contract before you exchange.
This allows everyone in the chain to make suitable arrangements (removals van, time off work, bribe friends to haul boxes, etc).
What happens on completion day?
All you need to do is wait for a telephone call from your solicitor.
They’ll confirm the completion, which means the money has been transferred. This happens electronically between the solicitors’ bank accounts.
If all goes according to plan, you can then collect the keys from the estate agent.
Congratulations, you're a homeowner!