The Exchange Process
The Exchange of Contracts is the key moment in the Conveyancing Process. This is when the parties become contractually bound to proceed with the sale or purchase and the completion date is set.
After this point, neither party can back out without major penalties. When buying with a mortgage, the minimum time between Exchange of Contracts and the completion date is usually 5 working days – subject to the lender’s requirements.
At Exchange of Contracts the parties become contractually bound to proceed.
Exchange of Contracts cannot take place until the previous stages have been completed in full, the buyer and seller have signed and returned the Contract and the buyer has provided the agreed deposit to their lawyer.
The Exchange Process takes place over the phone. The lawyers agree for the signed contracts to be sent to one another with the result that the seller’s lawyer holds the buyer’s signed contract and vice versa. Where there is a property chain, your lawyer, with the help of the Estate Agent, will ensure all parties are ready to exchange before instigating the process.
It is important to know that the deposit being transferred is almost always held by the lawyer as “stakeholder” and this means that although the deposit has been paid by the buyer, it cannot be released to the seller until completion. A buyer should ensure that they start their buildings insurance policy from the point of Exchange of Contracts as it is at this stage that the beneficial interest of the Property passes to the buyer.
Following Exchange of Contracts there are pre-completion formalities to be undertaken by the lawyer including carrying out Land Registry searches to confirm that there have been no new onerous matters entered on to the title since it was provided as part of the Contract Package.