Exchange – acting on a purchase
Exchanging contracts is the moment when a buyer and seller swap documentation to confirm a property sale is legally binding. From the point of exchange, the sale is confirmed for the agreed asking price, no variations can be made to the contract and neither party are able to withdraw without facing extremely serious financial consequences.
The exchange of contracts is a crucial stage, as prior to this happening, neither the buyer nor seller are legally bound to the sale of the property.
What we need to exchange contracts
- We will require your deposit to be sent to us in readiness to exchange. This is usually 10% of the property’s purchase price but can be less if you have a lower deposit agreed. The exchange deposit is the buyer’s commitment to the sale and acts as a part payment towards the purchase. A buyer who pulls out of a sale after exchange of contracts could be sued by the seller, who may end up being awarded the exchange deposit, plus further compensation.
- A completion date to be agreed between the seller and the buyer. This will need to be agreed prior to exchange as on exchange we will insert the completion date into the contract which then becomes legally binding.
- We will require your specific authority on the day of exchange to confirm that you are happy for us to exchange contracts with the agreed completion date. This can be by way of a telephone call or written confirmation by email. We will require authority from all the buyers.
- If you are using a mortgage lender, then it is a requirement that adequate buildings insurance is in place from the date of exchange. If you are buying a leasehold property, this is usually the landlord or managing agents’ responsibility to ensure that buildings insurance is already in place, and we would check this prior to exchange. If you are buying a freehold property, this is usually your own responsibility to ensure that you have insurance in place. From the day of exchange, the responsibility of the property falls to you as the buyer, highlighting the importance of ensuring insurance is in place should anything happen to the property.
- If you are using a mortgage lender, we will need to check their requirements to request the mortgage advance. Usually, lenders require at least five working days’ notice for us to request the advance. We will need to ensure that we can give enough notice to your lender so that the mortgage advance is received in time for completion.
Completion
This is the day that the money is transferred to the seller’s solicitors, and you will receive the keys to the property. The process usually takes the following form:
- The buyer’s solicitors will send the funds to the seller’s solicitors.
- The seller’s solicitors will notify the buyer’s solicitors when funds have been received and they will also notify the estate agents confirming the keys may be released.
- As soon as the seller has moved out, the buyer will receive the keys from the estate agent selling the property and be able to move their things in.
We can never confirm a specific time that completion will take place as it depends on various factors such as the banking system and if you had a related sale when we receive funds from your buyers.
Written by Lucy Sivell, Paralegal
lucy.sivell@chesterlaw.co.uk
Please do not hesitate to contact Chester and Co Solicitors on 01202 395395 if you would like to instruct a lawyer on your conveyancing transaction or if you wish to obtain legal advice.