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Exchanging of Contracts

Katie Cullen
Written by Katie Cullen
12th January 2017 (Last updated on Monday 13th November 2017)

Exchanging contracts is a process towards the end of the property selling process where identical contracts are signed by both the buyer and the seller.

Exchanging contracts is usually done by your solicitor or conveyancer. The first step will be that your solicitor and the other party’s solicitor will read out the contracts over the phone to ensure they are identical – these phone calls are also recorded. Once that is complete, both conveyancers will immediately send contracts to one another in the post.

Before exchanging contracts, you and the buyer are legally able to back out of the selling process at any time, no matter how inconvenient it might be to the other party. However, once contracts have been exchanged, you are legally obliged to sell the property. Pulling out of the sale after exchanging contracts will mean you are liable to be sued and lose out on a lot of money.

This article will cover the following points

When to Exchange Contracts What to do After Exchanging Contracts Pulling Out After Exchanging Contracts

When to Exchange Contracts

Contracts will usually be exchanged between seven and 28 days of completion, although it is possible to exchange contracts on the same day as completion.

Although your conveyancer will primarily take control of the contracts, there are things you will have to do beforehand:

  • Agree on an offer – Agreeing on a price is part of the contract, as is establishing exactly which fixtures and fittings will be included in the sale of the property.
  • Agree on a date of completion for the sale – You will need to negotiate a day that suits both you and the buyer for the sale of your property to be completed. This is important if you are in a chain, or if you already have a move-in date established at your new property.
  • Read and understand the contract – You should thoroughly read through the contracts to ensure you are happy everything that has been included.

What to do After Exchanging Contracts

Once contracts have been exchanged, you will have an agreed waiting period in which the buyer will get everything in order for the completion date.

In this time, your buyer will:

  • Usually visit the property with an estate agent to ensure the property is in order with all agreed fixtures and fittings included.
  • Finalise all finances with their mortgage provider, reader for transfer to you in the date of completion.
  • Register the transfer of ownership with the land registry.

In this time, you should:

  • Have a removal company set in place, and must be moved out by the date of completion
  • Ensure everything is as it was described in the contract – all fixtures and fittings agreed upon are included and in good condition
  • Tell utility companies and your bank that you are moving to a new address
  • Change your address on your driving licence
  • Organise your post to be forwarded.

Pulling Out After Exchanging Contracts

You or the buyer will be subject to major penalties from the other party if one chooses to back out of the sale after exchanging contracts.

If the buyer pulls out: You will likely be able to keep their contract deposit (usually 10% of the property price) and will be able to sue the buyer if you think this is justifiable.

If you pull out: Likewise, the buyer will be able to obtain a sum of money that is similar to their contract deposit and will also be liable to sue.