Having your offer accepted on your dream home is an exciting time, but before it’s time to break out the bubble wrap and packing boxes, it’s important to legally seal the deal with the exchange of contracts.
This is an essential albeit sometimes tricky part of closing a sale, and according to the Homeowners Alliance, it is a process that should take place between seven and 28 days prior to completion. “Until you exchange contracts, neither side has any legal obligation to buy or sell the property, and both can pull out without any penalty (or only the deposit on agreeing offers, if one was made). Both buyer and seller sign identical contracts, but only when they are formally exchanged by the solicitors does the deal become legally binding. Between exchanging contracts and completion, either side will almost certainly pay major penalties if they pull out.”
Contract exchange and completion when buying a home
In some cases, it may be possible to facilitate the exchange of contracts on the very day the offer is accepted and you are ready to move.
This expedites the process, and so while it may be an appealing choice for those in a hurry to buy or sell quickly, there are some things to consider. For example, if you are in a property chain, there is a higher risk of someone pulling out and compromising the sale. You will need to have funds available before you complete the sale, and so for most buyers this means having to wait to receive cleared funds from their mortgage lender, which may not happen on the same day. If you are a cash buyer however, this won’t be an issue, and so a quick, cash same-day-sale may be more feasible. Of course, as you will be packed and ready to go on the same day, you are at higher risk of the seller make unreasonable demands as they know you have very few options having left exchanging to the last minute.
For these and other reasons, you may want to take more time to ensure that if needs be you are in a position to negotiate and protect yourself.
How do solicitors facilitate the exchange of contracts?
When you are ready to exchange contracts, you should get in touch with your solicitor to begin the process.
Contracts can be exchanged over the phone, provided the call is recorded, or in person. Your solicitors will compare the contract between seller and buyer to ensure there are no discrepancies and that everything is as expected, and then once they are signed, copies are sent to both parties. Once you have signed, you have entered a legal binding contract to purchase the property, upon which point you will need to pay your deposit. Pulling out of the transaction after this point can result in legal action being taken against you and you will lose this property deposit. That is why it’s always important to take your time, work with a trusted solicitor, and ask plenty of questions before you sign on the line and exchange contracts.
Once you have exchanged contracts, you can breathe a sigh of relief and go ahead with your move!
Once you arrive in the property, you should compare the state of the house to the contract to ensure everything is in order; for example, if you have agreed upon having fixtures and fittings left in place, you should make sure these are all in the house once you move in. Then it’s a case of working your way through your moving checklist, taking care of tasks such as notifying your utilities provider, setting up post forwarding, and updating your personal details with bill providers, banks and of course family and friends.