What is exchange of contracts?
When purchasing a house, you will have heard of the term exchange of contracts. Here we look at a step-by-step guide to what an exchange of contracts is to help you to understand the process in full.
Once you have found a property and your offer is accepted there is a process to follow to complete the purchase. At no point is the purchase guaranteed until the contracts are exchanged. Once the contracts are exchanged there is very little that can go wrong and within a few weeks the keys to your new property should be with you. The process is as follows;
Deposit is paid
When the contracts are ready to be exchanged the solicitor or conveyancer will ask the buyer for the deposit payment to be made. Once the deposit is paid if the buyer decides to pull out of the purchase the deposit will be lost. Other costs that are due to the solicitor will also be paid at this point including conveyancing fees and stamp duty. Always ensure that you double, even triple check the solicitors bank details before authorising the transaction.
Contracts are exchanged and signed
Once the deposit payment is made the paperwork for contracts is drawn up. The buyer must check and sign the contracts which will be signed by the buyer, seller and both parties’ solicitors. This ensures that the sale is now legally bound and both parties can not back out.
Insurance is required
Once the contracts are exchanged the property is legally the new owners. Your solicitor will want you to ensure that you have appropriate buildings insurance cover before you move to your new home.
Completion date agreed
A completion date is the day that you will receive the keys to your new property and be able to move in. It is usually around two weeks from contract exchange but this can vary. During this time, it is useful to contact anybody who needs to be advised of your new address including billing companies, bank, doctors, schools etc. It is also a good time to pack your belongings ready for the big day.
Money is released
The next stage of the process is the release of monies from the lender following the title deeds being released. Once the lender receives the title deeds the money is transferred to the buyer’s solicitor. Final checks are made at this stage by the lender to ensure that all is still in order with the buyer’s credit.
Seller receives the money
Once the buyer’s solicitor receives the monies from the lender this is transferred to the seller’s solicitor to complete the sale. As soon as this transaction is made the sale is complete.
Keys are received
The final stage of the process is the buyer picks up the keys from the estate agent or solicitor to the property.
This completes the process for the exchange of contracts. If you have any questions about this process or need any more information, please do not hesitate to contact our friendly advisors and we will be more than happy to provide you with any assistance you need.