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During the conveyancing process of buying and selling a house you will often hear the words “exchange of contracts” and “completion” but what does this mean?
Exchange of contracts takes places when all parties and their conveyancers are happy to proceed with the sale or purchase.
Before this stage is reached the purchaser’s conveyancer will carry out a check of the title deeds to identify any issues with the property, such as obligations which may restrict the use of the property. A range of property searches will be carried out including Local Authority, Drainage and Environmental and the purchaser’s conveyancer will raise enquiries with the seller’s conveyancer.
Once the search results have been received and the purchaser’s solicitor has received satisfactory replies to their enquiries then the buyer will be given a report setting out the conveyancer’s findings.
Prior to exchange of contracts the purchaser’s solicitor will need to be satisfied that the buyer has sufficient funds for the purchase, e.g. an acceptable mortgage offer. Similarly, the seller’s conveyancer will be checking that the seller will be able to settle all debts on the property.
If both parties are happy to proceed then they will sign the contract and exchange of contracts will occur when the parties’ conveyancers insert a date into the contract. Upon exchange the parties will authorise their conveyancers to insert the agreed date for completion. Conveyancers will run through the contract to ensure both parts are the same.
Exchange of contracts is an important stage in the conveyancing process as both parties are entering into a legally binding contract. If either party fails to complete on the completion date then they could be sued for breach of contracts. You should only authorise your conveyancer to exchange contracts if you are certain that you will be able to adhere to the terms of the contract.
The date of completion is the day that you actually move.
The purchaser’s conveyancer will request the purchase monies and/or mortgage advance in readiness for this date and the seller’s conveyancer will obtain redemption figures for all existing charges on the property.
The parties will each sign the Transfer Deed which is the document that legally transfers the property to the new owner.
If you are looking at buying property and want expert advice before you proceed, then please speak to one of the experts in our property team by calling 0808 1685 643, fill out an online enquiry form, or email email@example.com and we will be in touch.