Although swapping contracts between buyers and sellers might sound simple, there’s actually more to it than you might expect. In this blog post, we’ll look to cover all the details you’ll need to know when it comes to exchanging contracts – whether you’re buying or selling a property!
What is meant by an exchange of contracts?
An ‘exchange of contracts’ is the standard phrase to refer to when the solicitors for both the buyer and seller of a property swap documentation to signify an agreement has been reached between both parties.
When are contracts exchanged?
Exchanging contracts should only take place after everything is signed and finalised. Once the contract exchange takes place and all the documentation is signed, the agreement becomes legally binding. This means everything needs to be in order before the exchange takes place. Your solicitor should ensure you’ve got everything covered before the exchange takes place, but you’ll want to ensure the following has occurred before swapping documentation:
- An offer has been made and agreed to
- Surveys of the property have been carried out
- A property valuation has been conducted by the lender
- Conveyancers have completed searches of the property
- A deposit has been secured
- The EPC has been checked
- A completion date has been agreed between all parties
- The contract has been read, understood and any additional questions have been asked
- The contract has been signed
Typical timeframe between exchange of contracts and completion
The usual timeframe between the exchanging of contracts and completion is around one to four weeks, but this can vary.
If both parties are happy for a quick exchange of contracts, everything will need to be packed up and ready to be moved in or out. Some lenders might not be too keen, and some ask for a minimum of five working days between contracts being exchanged and completion day.
What happens after contracts have been exchanged?
Once the contracts have been exchanged, you can begin to prepare for the big move. If you’re moving into a new property, you’ll now have a completion date in place so you should be able to plan how and when you are going to move all your belongings in.
Whilst you are waiting for the completion date, you can start with other tasks that need doing in the meantime, such as changing your address, getting the title deeds from the lender, and registering a transfer of ownership through the Land Registry.
This is likely the big day you have been waiting for! On completion days, buyers will receive the keys to the new apartment, and the money will be transferred from the buying party to the sellers. Once this exchange has taken place, buyers can enjoy moving into their brand new home, whilst sellers can celebrate the sale of their asset.
Step by step guide
To summarise how the whole process will work with the exchanging of process, we’ve got a step-by-step guide to breakdown how it will work:
- Check everything in the contracts is in order
- Sign the contract
- Pay house deposit to your solicitor
- Instruct your solicitor to exchange contracts
- Prepare for the move
- Certificate of Title sent by buyer’s solicitor to mortgage lender
- Lender makes all final checks
- Money is released to seller
- Seller’s solicitor confirms the transaction has taken place
- Keys are handed over to the new homeowners
So, while exchanging contracts may seem like a simple process, it can be a stressful time as a lot rides on the smooth exchange of the key documentation. It’s an essential part of the moving process, so be sure to take extra care and read everything carefully.