Most people have little or no idea what happens after they have agreed a sale on their home and think estate agents do little to earn their money. I can assure you this is where a good agent is vital to the whole process making sure the transaction goes through with regular updates and communication but perhaps the question most people ask me is-
HOW DO SOLICITORS EXCHANGE CONTRACTS
Contracts are usually exchanged by both solicitors reading out the contracts over the phone (which is recorded by both of them) to make sure the contracts are identical. The contracts are then immediately sent out by them to one another in the post. This is known as exchange.
If you are in a chain, your solicitor will do the same thing, however, they will only release the contract to the solicitor acting on the other side if all the people in the chain are happy to ahead. That means if one person pulls out or delays everything gets held up.
As soon as exchange has happened you will be in a legally binding contract to buy or sell the property. If you do not complete on the date agreed in the contract and you are the buyer, you risk losing your deposit and you can be sued. However, if you are the seller, you must sell to the buyer. If you do not the buyer can keep their deposit and sue you.
WHY DO WE EXCHANGE CONTRACTS
Until you exchange contracts neither side has any legal obligation to buy or sell the property. Both seller and buyer can pull out of the transaction without any penalty. It is only when contracts are formally exchanged by the solicitors does the deal become legally binding. If completion is late penalties start to accrue. For each day that completion does not take place interest will accrue at a rate specified in the contract until completion has taken place.
WHEN DO I EXCHANGE CONTRACTS
You usually exchange contracts between 7 and 28 days before completion although you can exchange contracts on the day of completion in exceptional circumstances. You need to make sure you have everything in place before hand, so that nothing can go wrong. For example if you are buying-
- You have agreed on an offer
- You have had a mortgage valuation and any other surveys you require
- You have had a formal mortgage offer in writing
- You have deposit funds available
- Your solicitor has carried out and reported to you on the relevant searches, all enquiries and replies to those, the mortgage and the title to the property and that you have confirmed you are happy with everything received.
- You have organised building insurance. After you exchange contracts, you must put your buildings insurance on risk as you will be liable for the property immediately after exchange.
- You have agreed a date for completion with the other party. The date will be written into the contract.
- You have read, understood and signed the contract.
If you would like any advice on the sales process please do not hesitate to give us a call on 01923 285886 and we will be delighted to help.