Exchanging contracts: Guide to completion
After weeks of searching, negotiating, and securing a mortgage, you’ve finally had an offer accepted on your dream home. But the journey isn’t over just yet. The next major milestone is exchanging contracts, which legally binds both the buyer and seller to the sale.
Here’s everything you need to know to navigate this crucial stage with confidence.
What is exchange of contracts?
Exchange of contracts is the point in the home-buying process where both the buyer and seller sign identical contracts and formally commit to the transaction. Once this step is completed, the sale is legally binding, and pulling out can result in financial penalties.
Why do we exchange contracts?
Exchanging contracts provides legal certainty for both parties. Before this point, either side can withdraw from the sale without consequences. Once exchanged, the buyer is legally obligated to complete the purchase, and the seller must proceed with the sale. It also confirms key details such as the completion date.
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When does exchange of contracts take place?
Exchange usually happens once the following conditions are met:
- The buyer has secured a mortgage offer
- All property searches and surveys are completed
- Any issues raised during conveyancing have been resolved
- A completion date has been agreed upon
- The buyer has paid the deposit to their solicitor
How long does it take between exchange and completion?
The time between exchange and completion can vary. In most cases, it takes one to two weeks, but it could be longer depending on circumstances. Some buyers and sellers opt for a same-day exchange and completion, though this requires everything to be in place beforehand.
What can hold up exchange of contracts?
Several factors can delay the exchange of contracts, including:
- Mortgage approval delays
- Issues uncovered in property searches or surveys
- Outstanding paperwork
- Chain-related complications
- Last-minute renegotiations
Your step-by-step guide to exchanging contracts and completion
1. Double-check all paperwork
Ensure that all documents, including your mortgage offer, property searches, and survey reports, are in order. Your solicitor will review the contract and raise any final queries.
2. Pay your deposit to the solicitor or conveyancer
Buyers typically pay a 10% deposit (though this can vary) to their solicitor before contracts are exchanged. This money is held in escrow until completion.
3. Sign the contract and ask the solicitor to action the exchange
Once you’re happy with the terms, sign the contract and instruct your solicitor to proceed with the exchange. The buyer’s and seller’s solicitors will then exchange signed contracts.
4. Prepare for eventual completion
Now is the time to arrange building insurance, as you become legally responsible for the property once contracts are exchanged. You should also start planning your move.
5. Completion is set
Your completion date is confirmed during the contract exchange. This is the day you will receive the keys and officially take ownership.
6. Money is released, and the Certificate of Title is sent
Your solicitor will request the mortgage funds from your lender. Once received, the money is transferred to the seller’s solicitor, and the Certificate of Title is issued.
7. Make your final checks
Conduct a final property check before completion to ensure everything is as agreed, particularly if fixtures and fittings are included in the sale.
8. Your seller’s solicitor will confirm receiving the money
Once funds have been received, the seller’s solicitor will confirm the transaction, allowing the sale to be finalised.
9. Pick up your keys and move in
The estate agent will release the keys, and you can officially move into your new home. Congratulations, you’ve completed the home-buying journey!
Need help with the selling process?
Selling a property and navigating the legal process can be complex. Our team at Martin & Co is here to guide you through every step. Whether you need advice on selling your home, understanding property chains, or securing a mortgage, we can help.
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