Exchanging and completing when buying a property

Make no doubt about it, exchanging contracts on a house is exciting. It is the point of no return, the moment in the house buying process when you know you are definitely going to buy the property. How long it takes to actually move in – the time before completion – can vary. Here is our guide to the final steps of buying a home: what happens before, during and after exchange of contracts and how to prepare for the completion date.

At a glance – what are the final stages of buying a house?

Preparing to exchange contracts

Getting ready to exchange contracts only happens when all the legal and financial aspects of the purchase are in place.

What needs to be in place before exchange

• Buyer and seller have agreed a purchase price
• Buyer has a formal mortgage offer and deposit funds in place
• A completion date has been agreed
• Buildings insurance has been arranged by the buyer and is in place

The checks your solicitor will complete

• Preliminary enquiries
• Local searches
• Checking the EPC is up to date
• Fixtures and fittings included in the sale have been agreed

Exchange of contracts

What does exchange of contracts mean?

Exchange of contracts is the moment at which buyer and seller swap signed contracts and confirm the sale of the property. This is the point when the sale becomes legally binding.

When does exchange of contracts take place?

Exchange usually takes place between 5-28 days before completion, and on average it is about 10-14 days before.

What is an exchange deposit and what’s it for?

The exchange deposit is the money paid by the buyer to confirm their commitment to proceeding with the purchase. It is usually 10% of the purchase price, and is unrecoverable. The seller can claim the exchange deposit if the buyer pulls out of the sale after exchange of contracts.

How long does exchange take?

The actual legal process of exchange can take a few hours to go through. The buyer’s and seller’s solicitors will read their client’s version of the contract aloud to each other over the phone, ensuring that the documents are identical. They will then post a copy to the other solicitor. The deposit can take several hours to move from the buyer’s to the seller’s solicitor.

Can anything go wrong before exchange?

Yes, either party could pull out of the transaction before exchange of contracts, and there is no legal obligation to proceed until exchange has taken place.

What happens between exchange and completion?

This period gives the buyer and seller time to instruct their respective removal companies about the completion date. The seller can start packing up their possessions and making any arrangements regarding postal redirections or informing utility companies. The buyer has the right to inspect the property once it is empty to ensure any requested repairs have been made.

Completing the purchase

Setting a completion date

The completion date is the day the buyer and seller agree as the day when all funds are to be transferred and the sale confirmed. The size of the property chain will dictate to a large extent how easy or difficult coming to an agreement will be. If you are in a large chain you may have to be more flexible about the completion date, especially if you are at the bottom of the chain. This date will be influenced by the availability of your removals company.

What happens on completion day?

It is a waiting game on completion day. It could be several stressful hours until all the purchase funds have been received by the seller, and their purchase has also completed. Only then will you receive confirmation from your estate agent that you can pick up the keys and move into your new home.

Completion checklist

Ensure all these things are ready for completion day:

• Make sure funds are in place
• Is your removal company booked?
• Buildings insurance should now cover the property you are buying
• Check the contracts one last time
• Do you know where to collect the keys from?

Here are some more tips for getting organised for your moving day.

Frequently asked questions

Can I exchange and complete on the same day?

It is technically possible to exchange and complete on the same day, but not very common. Lots of things usually need to happen between exchange and completion, from a financial, legal and logistical point of view, that would make doing both in 24 hours highly unlikely. Most solicitors insist on there being a gap of at least 5 days.

Can I change my mind after exchange?

You can, but it comes with huge consequences. If you as the buyer withdraw from the sale you will be in breach of contract. The seller can respond by issuing a ‘Notice to Complete’ – a 10-day period in which completion must take place. If it doesn’t, and the buyer is at fault, the seller has a legal right to keep the deposit and sell the property to someone else. They can also claim compensation or damages.

How much does it cost to exchange contracts?

To exchange contracts, you will usually need to pay a deposit of 10% of the agreed asking price of the property. This might only be 5% - perhaps if you are a first-time buyer and you can only afford a 5% deposit. There is no separate cost to exchanging contracts on a house. It will be part of a conveyancing solicitor’s overall billed work.

Can I exchange and complete without a solicitor?

Again, you don’t have to, but in reality, the only way to undertake the complex legal transactions involved in buying a house is through a qualified solicitor.

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