This month on our blog the Blount & Maslin team examine two key events within the selling process, the “exchange of contracts” and “completion”.
What is exchange:
Exchange: this is when the Buyer and Seller sign the contract, and their solicitors exchange them. When this is done, both parties are in a legally binding contract; so you can relax. Before exchange can take place, the buyer and the vendor will be required to agree a completion date. Once both parties have agreed the date, the solicitors will do their final checks and exchange contracts. It is only when contracts are exchanged that the buyer’s solicitor will send the deposit to the vendor’s solicitor, after which the contract becomes legally binding for both parties. At this point,
Prior to the exchange of contracts, any agreement to buy or sell a property is not legally binding. This means the vendor or buyer can withdraw from the transaction at any time. This is one reason why many people want to exchange contracts as quickly as possible, but unfortunately, exchange of contracts can only take place when all finances are in place and most of the legal work has been completed. If you are in a chain of transactions, exchange can only happen when every party in that chain is ready to go ahead.
What is completion?
Completion: this is the date when the Buyer will physically own the property.
The completion date, put simply, is moving day! It’s the date on which the vendor must vacate the property and the buyer will get the keys and can move in. On completion day any outstanding balance on the sale of the property must be handed from the buyer to the vendor, via their solicitors. When the funds have been received by the vendors solicitor they will inform the Estate Agent, who general hold the keys for the property, that they are now able to release the keys to the buyer, this generally happens around midday.
Failing to complete can have financial consequences so it’s important that buyers and vendors understand their obligations on moving day. If the buyer does not complete the transaction, they will lose their deposit and possibly owe the vendor more if their deposit on exchange was less than 10% of the property price. On the other hand, if the vendor refuses to sell, the buyer has the right to sue them. It is always advisable to have a delay between exchange and completion to avoid stress (for example arranging removals, arranging mortgage funds and utility suppliers) and any potential risks raised by moving on the same day that the contracts are exchanged. Remember that until exchange is complete there is no legal obligation for the buyer or seller to continue with the sale.
For more information on the selling process explore these blog posts:
If you have any questions about the selling process, please do not hesitate to contact our friendly team at Blount and Maslin where we will be happy to answer any questions you may have!