When you’re selling a house, exchanging contracts is one of the most important steps in the process. In fact, it’s the point at which the legal transfer of ownership of a property occurs, and sets the completion date for the sale.
Here’s everything you need to know about the house sale exchange of contracts process.
What is exchanging contracts?
Exchanging contracts is the process of legally committing to buying or selling a property. Once the contracts have been exchanged, both parties are legally bound to complete the deal, and any backing out could result in significant financial losses.
The exchange of contracts typically occurs around two weeks before completion. This gives both parties enough time to tie up loose ends such as arranging removals and finalizing mortgage deals, while giving the solicitors time to complete any remaining legal obligations.
What happens during the exchange of contracts?
Before the exchange, the buyer’s solicitor will carry out a range of checks on the property, such as local searches and property surveys. This is to ensure that there are no outstanding issues, such as planning permission disputes or boundary disputes, that could scupper the sale.
Once the buyer is happy with the checks, the solicitor will agree on a completion date with the seller’s solicitor. On the day of exchange, both parties will send their signed copies of the contract to each other, along with a deposit representing a percentage of the purchase price.
Once the contracts are exchanged, the completion date becomes legally binding. The deposit is typically 10% of the purchase price, but can be negotiated with the seller.
What happens if something goes wrong during the exchange?
There are a number of things that can go wrong during the exchange of contracts process. For example, if the buyer’s mortgage falls through at the last minute or if the seller suddenly changes their mind about the sale.
If something goes wrong, the other party has the right to keep the deposit as compensation for any expenses they may have incurred. If the buyer is unable to complete the sale, they may also be liable for any additional losses the seller may suffer as a result.
Therefore, it’s important to have a reliable and experienced solicitor who can guide you through the exchange process, and ensure that everything is in order before contracts are signed and exchanged.
Conclusion
Exchanging contracts is one of the most important steps in the house sale process. It’s the point at which the legal transfer of ownership of a property occurs, and sets the completion date for the sale. It’s important to make sure that you have a reliable and experienced solicitor that can guide you through the exchange process, and ensure that everything is in order before contracts are signed and exchanged.