What Does Exchange of Contracts Mean?

What is the exchange of contracts?

Exchange of contracts is when both parties swap and sign the contracts. This is the point where you as the buyer will be asked to put down your deposit.

This is a crucial stage of buying a home. Once the contracts are signed, you will be legally bound to buy the home. If you wanted to pull out after this stage, you will lose your deposit. It also protects you if the seller backs out of the deal.

Once the contracts are exchanged, you and the seller can agree your completion date. This is when you will get the keys to your new home.

What happens at the exchange of contracts?

At the exchange of contracts, the solicitors for both parties will be in contact, usually over the phone. Here, they will read out and finalise the contract for your new home.

This is a good point to share anything you are unhappy or unsure about. This could be any repairs that need doing before you get the keys. These can then be noted in the contract to hold the seller liable for fixing them.

During this process, the solicitors will also set a completion date. This is where the house becomes yours and keys are handed over.

Once both parties are happy with the deal and completion date, the contract is signed and exchanged.

Exchange of contracts process

There are a lot of actions to address before the contracts can be exchanged and signed. This can delay or extend the process.

Here is a general rundown of the process:

  1. A survey of the house has been completed. The buyer and seller has agreed on any repairs or a new price based on this.
  2. The buyer has an offer for a mortgage confirmed.
  3. The seller has gathered all the paperwork for the home.
  4. The two solicitors set up a recorded phone call. Any issues are addressed and added to the contract.
  5. The seller's solicitor drafts up a contract and sends it to the buyer's solicitor to sign.
  6. The contract is signed and sent back to the seller's solicitor.
  7. Both parties agree on a completion date. The buyer's solicitor also arranges to send over the deposit to the seller.

What time of day does the exchange of contracts happen?

There is not a set time or day where contracts are exchanged. Instead, it will depend on each solicitor’s schedule.

This can also change due to delays. So be prepared to see your exchange of contracts pushed back if there are still actions to complete first.

What is a completion date?

A completion date is when the property becomes fully yours. This is the day you will get your keys and can move in.

On this date, your solicitor will also transfer the rest of the money for the house to the buyer.

This date is agreed during the exchange of contracts. There is a fine for any legal firms who do not meet this date. So, you can be fairly confident when booking any removal men or storage resources.

How long between the exchange of contracts and completion?

Once the contracts are exchanged, it usually takes between 7 and 28 days to reach your completion date. But this can be longer or shorter, depending on the buyer or seller’s wishes.

For example, if the seller cannot move to their new home in this time, they may ask for a longer completion date.

What do you need to prepare for the exchange of contracts?

To complete the exchange of contracts, each party has a number of items to tick off and finalise. This is what can slow down the process and cause delays in getting your keys.

As a buyer, you should:

  • Get written proof of your mortgage offer
  • Have the money for your deposit ready
  • Set up a survey for the property
  • Flag any concerns to your solicitor
  • Let your solicitor know if you are part of any government schemes. This could be owning a Help to Buy ISA

As a seller, you should:

  • Collect all the paperwork about the house for the new owner
  • Make any pledges for repairs flagged in the house survey
  • Fill in the related forms, such as the property information form (TA6)

Both the buyer and seller should:

  • Agree on a completion date
  • Agree on a new price, if relevant
  • Sign the contracts

What can hold up the exchange of contracts?

There are many factors that can hold up your exchange of contracts. This includes:

  • Ongoing issues. Are you and the seller still negotiating the price after a house survey. Are you still unclear what fixtures are included? Is your solicitor not convinced these concerns have been addressed? All of these factors can delay the signing of contracts.
  • Delays in the buyer. There are things the buyer needs to sort before the contracts can be exchanged.
  • Delays in the seller. A seller has several forms to fill out before contracts can be signed. Missing or pushing back on this can delay things.
  • Scheduling clashes. Both solicitors need to agree on a day and time to exchange contracts. They will both have many other clients and appointments too. This can make finding a date to suit tricky.
  • External setbacks. This could be the buyer has yet to get their mortgage in writing. Or maybe the seller is facing delays with their own house purchase. Either way, these external factors can push things back.

The content on this page is for reference and does not constitute finance advice.

For impartial financial advice, we recommend government bodies like the Money Advice Service.

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