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Exchanging contracts is exciting - that property you were viewing becomes yours. But, exchanging contracts can be tricky. The Information below will explain how to ensure it is as stress free as possible
Until you exchange contracts, neither side has any legal obligation to buy or sell the property, and both can pull out without any penalty (or only the deposit on agreeing offers, if one was made). Both buyer and seller sign identical contracts, but only when they are formally exchanged by the solicitors does the deal become legally binding. Between exchanging contracts and completion, either side will almost certainly pay major penalties if they pull out. However, it is extremely rare for anyone to pull out after exchanging contracts, and in practical terms, this is when you can breathe a sigh of relief - you can be pretty sure your house sale will go through.
Only when contracts are formally exchanged does the sale and purchase become legally binding
You usually exchange contracts between 7 and 28 days before completion - although you can exchange contracts on the day of completion (see below). Because exchanging contracts means you are legally committed to buying the property, you have to make sure you have everything in place before hand, so that nothing can go wrong. You should only exchange contracts after:
Once you have done these things you will agree on a date and time to exchange contracts - usually at midday on any given day. If you have one, your solicitor or conveyancer will exchange contracts for you.
It is possible, increasingly common, and has certain advantages - it certainly speeds the process up, and means you don't have to pay a deposit on exchange of contracts. However, there are downsides - it is incredibly stressful, and you don't definitely know that you are moving until the day that you move, which makes arranging removals men and forwarding post more complex. If anything does go wrong, you don't have any time to put things right. You will need to have your house packed up with the removals men ready, while you are waiting to hear that contracts are being exchanged. If you are keen to go for this, the things to consider are:
This is usually done by both solicitors/conveyancers reading out the contracts over the phone (which is recorded) to make sure the contracts are identical, and then immediately sending them to one another in the post.
If you are in a chain, your solicitor/conveyancer will do the same thing, but will only release it if all the other people in the chain are happy to go ahead. This means if one person pulls out or delays, everything gets held up. Once you have exchanged contracts you will be in a legally binding contract to buy the property. If you do not you will lose your deposit and you can be sued. Equally though, the seller has to sell or you can keep their deposit and sue them.
Reaching the exchange of contracts is the difficult part - after that it should be relatively plain sailing. The next big step is completion - when you take possession of the property and can move in - but there are various things you should do before hand:
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