What Does It Mean To ‘Exchange Contracts’?
Exchange And Completion – What Happens Now?
You may have had an offer on a property accepted but until you have exchanged contracts, your move is not yet guaranteed. Here is our guide on what is involved in exchanging and completing on your new home.
What Does It Mean To ‘Exchange Contracts’?
When you exchange contracts on a property, this means that both the buyers and the sellers conveyancing solicitors swap the signed contracts, and the buyer pays the deposit. At this point, any agreement made to buy or sell a property becomes legally binding. In other words, Exchanging on your house will take place and no one can change their mind.
There are a number of things you need to do before exchanging on your new house. This guide will explain them along with timelines and processes as well what is actually involved in exchange and completion.
Exchanging Contracts On A House: What Happens?
Once an offer has been accepted, there are several things that need to be done before the exchange of.
If you are the buyer, then once your offer has been accepted, you should:
- Inform your conveyancing solicitor on your intention to purchase the property. Ideally, you will have sought a number of conveyancer quotes in advance know who you are going to instruct.
- Conveyancer quotes will vary from one transaction to another and each will depend on a number of factors.
- Organise a survey to examine the property to identify any defects that would affect the property’s value. If the survey shows any faults you might negotiate repairs or a reduced price with the seller depending on what has been found.
- Get a copy of your mortgage offer.
- If the property is leasehold, or a share of freehold property, examine the lease and raise any questions or concerns with your solicitor.
- Take out buildings insurance. This must be in place from the date of exchange.
- Tell your solicitor when this is done and let them know your policy number.
- If you have a Help to Buy Isa, let your mortgage provider know that you intend to buy a property. This means that they will request your government bonus.
- When your solicitor for conveyancing sends you the results of the searches, ask them to explain anything that concerns you or them.
- Sign the contract and complete any other documents. Return them to your conveyancing solicitors as soon as possible.
If you are the buyer, your solicitors or conveyancing provider should:
- Ensure that any repairs that you negotiated with the seller have been documented in the contract.
- Order local searches to be carried out which check for any nearby planning or environmental issues.
- Raise any issues on your behalf relating to the or the searches.
- Check over the contract and forward it to the buyer for signing.
- Agree on a date of completion with the seller’s conveyancing solicitors.
- Arrange payment of the deposit on your behalf.
If you are the seller, then once your offer has been accepted, you should:
- Collect all paperwork relating to any work that has been done on the house, whether it was done by you or the previous owners. You might need to supply proof of planning permission, building regulations for example. If the property is leasehold, you will need a copy of the lease.
- Complete all necessary forms which should have been forwarded to you by your conveyancing solicitors. This will include property information (TA6) and fixtures and fittings forms (TA10).
- Contact your buildings insurance provider to tell them that you are you’re moving and cancel the policy
- Arrange a new policy for the property you are moving into, starting on the date of exchange.
- Ask your mortgage provider for a mortgage statement/settlement figure and secure finance for your new home.
If you are the seller, your solicitors or conveyancing provider should:
- Ensure all the relevant paperwork has been completed by you and send it to the buyer’s solicitor.
- Answer any queries raised by the buyer’s conveyancer.
- Get hold of all paperwork including the title deeds and the sellers mortgage figures.
- Write up a draft a contract for the sale.
- Agree on a date of completion with the buyer’s solicitor.
When Do I Exchange?
Exchanging on a house is the point of no return. Once all the paperwork is in place and the buyer and seller have signed identical contracts, they can be exchanged and deposits are paid. This will happen at a set time after which, your agreement becomes legally binding. After exchanging on your new house, neither party can back out without suffering major financial penalties.
Exchange can happen over the phone by both solicitors reading out the contracts which are then immediately mailed to one another. A hold-up anywhere along the chain could delay all people waiting on exchanging house.
How Long Does It Take To Exchange And Complete?
A fairly quick and straight-forward transaction would take around 2 – 3 weeks from enquiries to exchange of contracts. This is the best case scenario.A more typical transaction will take between 4 – 8 weeks after completion of enquiries. Many take longer.
When contracts have been exchanged, a completion date will be set. Solicitors can be sued if they do not meet this date so you can be fairly certain you will complete then. Completion dates are often two weeks after exchange as a guideline.
What Can Hold Up The Exchange Of Contracts?
Several things that can hold up the exchange of contracts. These include:
Enquiries – If your solicitor has concerns over answers to their queries, they will not complete.
Slow Buyers/Sellers – Sometimes it’s the buyer or seller holds things up (sometimes deliberately, sometimes not). They might not have the information ready or return contracts promptly.
Overworked Solicitors – If your solicitor has a lot of clients, they may take longer to carry out your conveyancing.
Complex Transactions – Some transactions are more complex than others if they include non-standard elements eg: if there is a complicated chain, the property is leasehold.
Slow Searches– Some authorities are slow at sending search results.
Mortgage Lenders – The transaction will depend on the speed of the lender if a mortgage is required.
How Much Should I Pay For Conveyancing?
Conveyancer solicitor quotes vary and are dependent on a number of factors. A conveyancing quote will cover work carried out by a solicitor and typically cost between £850-£1500. On top of this you will pay disbursements. Conveyancer quotes for leasehold properties cost more than for freehold properties.