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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.
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:
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:
In this time, you should:
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.
Last updated on Monday 13th November 2017