Exchanging of Contracts
Written by Martha Lott
13th Nov 2018 (Last updated on 3rd Mar 2020) 6 minute read
Exchanging contracts happens towards the end of the conveyancing process when both the buyer and seller sign and exchange their contracts. This then to transfers ownership of the property.
This is a vital part of the conveyancing process as not only does it make the buyer the legal owner of the property, but it also makes it harder for both parties to back out of the sale. Once the contracts have been signed and exchanged, the transaction is legally binding.
To further explain the process, we’ve put together this guide to help explain everything you need to know about exchanging contracts. From how to get started to how long it takes, we’ve got you covered.
When Do You Exchange Contracts?
Exchanging contracts will happen after your conveyancer has enquired about the relevant property searches but before completion day. Contracts will usually be exchanged between 7-28 days prior to the completion date. Although, it’s sometimes possible to exchange contracts on the same day as completion.
You can only exchange contacts after you/your conveyancer has:
1. Agreed on an Offer
Agreeing on a price is part of the contract as it’s establishing exactly which fixtures and fittings will be included in the sale of the property. Only once the seller has agreed and accepted an offer will you exchange contracts.
2. Had Your Mortgage Agreed
After you’ve had your mortgage application accepted, you can exchange contracts.
3. Undergone Property Searches
Your conveyancer will enquire about property searches to discover vital information on the property and its local area.
4. Agreed the Date of Completion
A date for completion will need to be agreed upon by both the buyer and seller before you can exchange contracts. This is important if you’re in a property chain or if you already have a move-in date established.
5. Read and Understood the Contract
You should read through the contract to ensure you’re happy with everything that has been included. Your conveyancer will help you break down and understand the contract.
What Happens During the Exchange of Contracts Process?
Before exchanging contracts, both the buyer and seller are legally allowed to back out of the sale. Once the contracts have been exchanged, it’s difficult to pull out of the sale, with the seller being legally obliged to sell the property.
Once both sides have exchanged contracts, this will transfer ownership of the property from the seller to the buyer. As previously mentioned, your conveyancer will carry out most of the work on your behalf, requiring only your signature.
How Do I Exchange Contracts?
Your conveyancer or solicitor will exchange contracts on your behalf. Contracts are exchanged by both the buyer's and seller’s conveyancers who will read out the documents on a recorded phone call. This ensures that they’re identical. The contracts will then be sent in the post and exchanged between both conveyancing solicitors.
However, it’s important to remember that exchanging contracts in a property chain is more complicated. Your conveyancer can only exchange contracts on your behalf when all the transactions in the chain are ready to continue. If one transaction is delayed, so are the others.
How Long Does It Take to Exchange Contracts?
Exchanging contracts usually happens during week 8 of the conveyancing process This can vary depending on how quick your conveyancer is and whether you’re in a property chain. Usually, it should only take up to a day to complete the process.
The exchange of contracts will happen between 7-28 days before the day of completion. However, it’s possible to both complete and exchange contracts on the same day if you’re a cash buyer or are chain free.
If you’re in a property chain, you will have to wait for the first transaction in the chain to exchange contracts. They will inform the next person in the chain that they have confirmation to go ahead and can exchange their contracts. If you’re last in the chain, you might not exchange contracts until as late as 5pm that day.
How to Quickly Exchange Contracts
There are many things that could cause a delay in the exchanging of contracts process. To avoid these delays, follow these top tips to help speed up the process and get the ball rolling:
1. Avoid Property Chains
Being in a property chain that contains three or more transactions will slow down the whole process. If one person was to back out or faces delays, this will affect your process too. By not being part of a chain, you can exchange contracts quicker. When enquiring about the property, see if you can uncover any information on the seller’s situation and whether they’ll be buying a house as well as selling.
2. Choose the Right Conveyancer
If you take the time to find a conveyancer that’s regulated by the CLC, SRA or the Law Society, then you’re guaranteed an efficient process. By using a comparison website like Compare My Move, you'll be provided with verified and trusted conveyancers to choose from.
3. Consider Online Conveyancing
Whilst many people doubt the legitimacy of online conveyancing, all online conveyancers featured on comparison websites will be regulated by the CLC, SRA or the Law Society. Online conveyancing is noticeably quicker than traditional conveyancing as everything can be easily tracked online.
4. Organise Your Mortgage
You’ll want to stay on top of your responsibilities and begin your mortgage application before searching for a property. If you’re still waiting around for it to be accepted after finding a property, then this will ultimately delay the exchanging of contracts.
Exchange of Contracts Deposit
When you exchange contracts, as a buyer, you will be required to pay a 10% deposit of the property price. The amount of deposit that you pay will vary depending on your situation, with 5% deposits being occasionally accepted.
The amount of deposit to be paid during the exchange of contracts will be confirmed and agreed upon during the recorded phone call between conveyancers. If you’re a buyer, you should make sure you have the funds available to speed up the process.
What Happens After Exchanging Contracts?
Once the contracts have been exchanged, you’ll have an agreed waiting period in which both the buyer and seller must get everything in order, ready for the completion date.
After exchanging contracts, the buyer should:
- Ensure you’ll have the funds from your mortgage provider ready prior to completion day.
- Ensure your conveyancer has registered you as the new owner of the property with the Land Registry.
- With your estate agent present, you should double check the fittings and fixtures are in place before the completion day.
After exchanging contracts, the seller should:
- Make sure everything in the property is as it was described in the contract, with all fixtures and fittings included.
- Have a removal company set in place in order to move out by the agreed date of completion.
- Notify utility companies and your bank that you’re moving to a new address.
Saving Money on Your Conveyancing
To save both time and money throughout your conveyancing process, Compare My Move will connect you with up to 5 licensed conveyancers or conveyancing solicitors to help take away the stress. We only work with fully regulated solicitors and conveyancers to give you extra peace of mind and a first-class service.