Exchange of contracts is a stage in the conveyancing process where both the seller and buyer become legally obligated to complete the transaction and therefore sell and purchase their property respectively. Financial implications apply if parties do not complete on the completion date following exchange of contracts
Prior to exchange of contracts, it is therefore essential that all issues and aspects of the transaction are resolved before an exchange date is agreed. If you are a buyer, your solicitor will ensure you have signed and returned to them the legal documentation including the Contract and the funds are available for your purchase, for example ensuring you have your deposit and arranging funds to be released by your mortgage lender or your Help to Buy/LISA provider.
If you are selling, your solicitor will ensure you have signed and returned to them the necessary legal documentation including the Contract and have made arrangements to empty the property and hand the keys to the estate agents.
Whether you are buying or selling, your solicitor will telephone you to obtain your authority to exchange contracts on your behalf using your signed Contract on the day that all parties in the chain have confirmed they are ready to exchange contracts
On the day of exchange of contracts, the most common way in which contracts are exchanged is that both the solicitors for the seller and buyer will hold their own client’s part of the signed Contract. The buyer’s solicitor will also hold their clients deposit in their client account to send to the seller’s solicitor on exchange if required by the seller’s solicitor. The buyer’s solicitor will call the seller’s solicitor and check all the information on the Contract is correct and insert the agreed Completion Date (the day all parties move) into the Contract and the date of exchange of Contracts. At this stage all parties are legally bound to proceed to completion because Contracts have been exchanged via the telephone
The Completion Date is fixed on exchange of contracts.
From the date of exchange of contracts, if buying a freehold property, the buyer must also ensure that they have building insurance placed on risk from the date of exchange of contracts as the buyer is responsible for the property from exchange of contracts.
Whether you are looking to sell or purchase a property, our Solicitors are experts and are able to assist with all matters regarding residential conveyancing. If you are thinking of selling or purchasing a property, you can contact one of our Conveyancing Solicitors either through our online contact form on our website or by calling our offices on 02920 470909 (Cardiff) 01633 213411 (Newport), 01873 857555 (Abergavenny) for a non-obligation quote.