House completion – the process
If you’re in the process of buying or selling a property, you may well have questions about the house completion process.
Most people will only purchase a handful of properties in their lifetime, so it’s not difficult to understand why the conveyancing process (the legal term for the process of a house changing ownership) is one that few people are overly familiar with.
In this guide
- What does completion on a house mean?
- What’s the difference between exchange of contracts and completion?
- Can you pull out of a house sale after exchanging contracts?
- What happens between exchange and completion?
- How long does house completion take?
- How long do you usually have to wait between exchange and completion?
- Can you exchange and complete on the same day?
- How to choose a conveyancing solicitor
- How do solicitors exchange contracts?
- When will you pay your first mortgage payment after completion?
- What happens on completion day?
- Completion day checklist
What does completion on a house mean?
The end of the house sale process,when property ownership legally transfers to someone new, is referred to as ‘completion’.
What’s the difference between exchange of contracts and completion?
Exchange and completion are two separate stages of the house buying or selling process.
Once both parties are ready to go ahead with the sale, they will sign sales contracts. Signing of the house contract can take place at your own convenience, but must be witnessed by two independent parties. On the day of exchange, the signed contracts will be passed to the other party’s solicitor and the buyer will pay a deposit to the seller. At the point of exchange, the sale will become legally binding.
Completion occurs on the day the property legally transfers to the new owner.
Can you pull out of a house sale after exchanging contracts?
Once contracts have been exchanged, the house sale becomes legally binding.
If you decide you need to pull out of the sale, you will lose your deposit and may be sued for breach of contract. This could result in you being financially liable for the cost of the entire sale. If, as a seller, you decide to pull out of the sale after exchange, you will be required to repay the deposit – with interest – and leave yourself vulnerable to legal action.
What happens between exchange and completion
At the point of exchanging contracts, a date will be set for completion of the house sale. This will be a date agreed by the buyer and the seller.
Between exchange and house sale completion, both parties will be expected to make any necessary arrangements for the move. If you are the buyer, this will include arranging for any mortgage funds to be released to your solicitor ready for payment to the seller’s solicitor.
Until contracts have been exchanged, there is no legal obligation for the sale to complete and no contractual completion date. For this reason, it would be very unwise for either party to make any formal arrangements before contracts have been exchanged.
How long does house completion take?
There are several factors that have the potential to determine the time it takes to complete on a house sale. House completion may take a little longer if:
- either the buyer or seller are in a property chain
- the buyer is reliant on a mortgage
- the buyer does not have a mortgage in principle in place before an offer is accepted
- the searches carried out bring up any cause for concern
- the survey highlights any issues
- the mortgage lender has any concerns about the property value given in the formal valuation report
How long do you usually have to wait between exchange and completion?
It is usual to allow one to two weeks between exchange and completion. This will allow time for any mortgage funds to be released by the lender and for both parties to arrange removal services and any other necessary arrangements.
Can you exchange and complete on the same day?
It is sometimes possible to exchange and complete on the same day, but whether or not it’s a wise move will depend on your circumstances.
Because a property sale is not legally binding until contracts have been exchanged, you won’t have any guarantee that the sale will go ahead until the day of the move. Mortgage companies also need several days’ notice to release any mortgage funds, so it is likely that you will only be able to arrange for exchange and completion to happen on the same day if the property is being bought with cash.
If you are a seller currently living in the property you’re selling, or a buyer intending to move into the property straight away, it’s unlikely that exchanging and completing on the same day will be the right move for you. If, however, you are selling an inherited property that is vacant or a former buy-to-let property, exchange and completion on the same day may be a quick and convenient option for you.
How to choose a conveyancing solicitor
If you don’t already have a conveyancing solicitor lined up, it is important that you find one quickly in order to ensure the house purchase or sale doesn’t get held up.
A good solicitor is vital to a quick and successful house sale. They will keep you updated regularly regarding the progress of the sale and will talk you through any aspects of the sale that you are unsure of.
A bad solicitor has the potential to really hold your sale up. Slow progress is one of the most common reasons given for property sales falling through. This means the wrong choice of solicitor can ultimately result in the collapse of the sale.
Personal recommendations from trusted friends or family members are a great way to find a good conveyancing solicitor. You can also ask your mortgage lender or estate agent to recommend solicitors they have worked with previously who have provided a high level of service.
Solicitors can charge in different ways. Some will offer to complete the work for a fixed fee, some will charge an hourly rate, and others may charge a percentage of the property purchase price. Whichever system they use, a solicitor should be able to give you a comprehensive quote before you instruct them. It is important that you choose a solicitor you are confident will complete the task competently, so ensure you keep this as your main criteria rather than simply choosing the cheapest option.
How do solicitors exchange contracts?
Once all of the relevant work has been done and both parties are ready to go ahead with the sale, they will sign identical sales contracts.
The official exchange of contracts will usually happen on the telephone. Both solicitors will read out the contracts and agree the terms of the contract. The signed contract documents will then be posted to the other party immediately.
At the point of exchanging contracts, solicitors will also agree a legal completion date.
When will you pay your first mortgage payment after completion?
When you arrange your mortgage borrowing, you will be required to set up arrangements to make your ongoing mortgage repayments. Your mortgage lender will also let you know when your first mortgage repayment after completion will be due. If you complete your property purchase halfway through a month, your first repayment may be slightly higher than your usual monthly repayment. This is because it will include any payment due for an incomplete month as well as the first full month.
What happens on completion day?
Completion day is usually ‘moving day’. On the day of sale completion, the seller must vacate the property and arrange for the keys to be given to the new owner.
The buyer’s solicitor will transfer the remaining purchase funds across to the seller’s solicitor ready for them to repay any outstanding mortgage or charges, take out their legal conveyancing fees and pay the leftover funds to the seller. Any estate agents used will also be paid out of the sale proceeds.
The seller’s solicitor will send the property title deeds and transfer deed to the buyer’s solicitor, ready for them to be registered as the new owner with The Land Registry.
The buyer will need to pay their legal fees and any stamp duty payable to HMRC.
The estate agent will be responsible for handing over property keys to the new owner on completion.
Completion day checklist
The process of buying a property can quickly become overwhelming. This simple checklist will help to ensure you have everything in place ready for your house completion day.
- Make sure your solicitor has everything they need for the sale to complete, this includes any paperwork or funds.
- If you’re purchasing a property, ensure you have buildings insurance in place. Your mortgage company will usually require that you have buildings insurance in place from the date of exchange.
- You might want to consider hiring a professional cleaning company to go into the new property and give it a thorough clean before you arrive.
- If you have children or pets, you might want to arrange childcare or petcare for the day to make the move less stressful.
- Make sure all boxes are clearly labelled so your removal company knows where in the new property to put the different boxes
- Make a list of the people you need to notify about the move. This will include:
- Your bank or building society and any credit card providers
- Your local council to arrange transfer of council tax responsibility
- The post office (you can arrange to use their mail redirecting service for a small charge)
- The DVLA (if you have a driving licence)
- Your utilities providers – you will also need to give them final meter readings on the day you move.
- Your workplace
- Your phone and broadband provider
- Any subscription service providers eg. on-demand television, mail order or magazine subscriptions
- Make a list of important information for the property’s new owners, including information such as the locations of stopcocks and your fuse box. You should also leave any instruction booklets for appliances you’re leaving in the property and the boiler and details of rubbish collection days etc.
- Pack a box of moving essentials that you keep with you. Include items such as kettle, mugs, milk and tea bags, toilet roll, a torch, and clothes and bedding for your first night in your new property.
If you’re worried that your property sale might not make it to completion, you’re stuck in a slow property sale or you’re simply like the idea of a guaranteed sale on a date of your choice, a professional property buying company could take the stress and uncertainty out of your move. You can find out more about professional home buying companies here.
Find out more about:
- When’s the best time to sell a house?
- What is a down valuation?
- How to sell a house without an estate agent
- What to do if your house sale falls through
- How to avoid selling your house to pay for care
- How to sell my property portfolio
- The return of negative equity
- How much is my house worth?
- How long does a mortgage offer last when buying a new home?
- What is a mortgage prisoner and how do you become free?