6 min read
Exchange of contracts is one of the most important steps in the conveyancing process. Here, we give the answers to the most common questions we get on this.
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The exchange of contracts is a big milestone in the home-buying process, marking the point when the transaction becomes legally binding. Once this has been achieved, you can feel confident that you’ll be settled in your chosen home before too long.
Read on to find out all the information you need to know about the exchange of contracts process – including when it happens, what it involves, and potential delays.
In this article
Exchange of contracts is where the contracts are signed and swapped between the buyer and seller, meaning the sale has been legally agreed. It’s one of the last steps when buying a house and is also the point where you will need to pay your deposit to your conveyancer.
Whether you’re buying or selling, exchanging contracts is the goal both parties are working toward from the moment a property goes on the market. You can only exchange contracts once all the necessary property searches have been carried out, the paperwork and finance are in place and all parties are happy to make the deal binding.
As soon as contracts are exchanged, the transaction becomes legally binding. Before the exchange, there’s no legal obligation to complete, and it’s possible for either party to withdraw from the deal without legal penalty. Once you exchange, you’ve formally committed to transfer legal ownership of the property.
First time buyer? Find out exactly what to expect with our First Time Buyers’ Guide.
Exchange of contracts is the point at which the transaction becomes legally binding. Whereas completion is where the final balance of payment is passed to the seller and legal ownership is transferred to the buyer, along with the keys.
Exchanging contracts should only happen once all the paperwork has been done and each of these points satisfactorily ticked off:
Offer made and agreed
Seller’s Property Information Form (TA6) and Fixtures and Fittings Form (TA10) have been inspected
Surveys carried out
Lender has conducted valuation
Conveyancer has completed searches
Funding for deposit has been secured
Completion date has been agreed
Buildings insurance has been organised
Buyer has thoroughly read and understood the contract
Contract has been signed
Yes, your conveyancer will contact you to read out and finalise the contract ready for exchange. The other people in the chain will also be contacted by their conveyancers. Once this has been done the contracts will be exchanged and the transaction is legally binding. You’ll likely receive an email notification when this is done.
For a standard property purchase or sale, you cannot exchange contracts without having a completion date agreed. This is because the completion date is written into the contract.
If you’re buying a new build off-plan, you may be able to, so long as there is a long stop date written into the contract.
Thinking about buying a new build? Find out more about the new build conveyancing process, the pros and cons of buying a new build, and our top tips when buying a new build in our comprehensive guides.
It is possible to exchange and complete on the same day, however it is not preferred and tends to come at an additional cost. If anything does go wrong, you won’t have any time to address issues, which can be stressful. Additionally, you won’t know for sure that you are moving until the day which makes it tricky to pre-book removal companies or sort out anything else ahead of the moving day.
If you must exchange and complete on the same day, make sure all logistics, such as removals and utilities, are flexible or can be arranged last-minute.
Contracts can be exchanged at any time of the day. However, it will be during your conveyancer’s working hours and, more often than not, it is in the afternoon.
Once you get the ‘okay’ that it’s time to exchange, this is the process you can expect:
Sign your contract: Make sure your conveyancer has your signed contract ready to send to the seller’s solicitor.
Agree a completion date: Confirm this date with all other parties in the chain.
Transfer your deposit: Make sure you have sent the agreed deposit amount (usually 10% of the purchase price) to your conveyancer.
Instruct your conveyancer to exchange: You have to give your conveyancer the go-ahead to exchange.
Conveyancer review: The conveyancers in the chain will discuss any issues and go over the contract in detail.
Complete the exchange: Your conveyancer officially exchanges contracts with the seller’s conveyancer and your exchange of contracts is completed!
Read more about the process of buying a house.
The actual exchanging of contracts doesn’t take long and usually only requires a couple of phone calls.
Sometimes an exchange of contracts can be delayed because of blockers that are out of your control and need to be solved before the purchase can be completed.
The most common reasons why exchange can be held up include:
Whether it’s because they’re wobbling over the transaction itself, or are just ill-prepared, the other side can get in the way of progress. Good communication between agents and both parties’ conveyancers can help nudge them along, but often it’s a case of being patient and waiting for the other side to make up their minds.
Your mortgage in principle should be sorted out at the earliest stage of the transaction. However, if someone on the chain hasn’t secured theirs ahead of time, or they have had to re-apply, waiting for their mortgage to be approved can hold things up.
If the search provider is slow at completing and sending the conveyancing searches, you are held up as your conveyancer or solicitor cannot review the paperwork or raise necessary enquiries without the results. Additionally, if the searches raise issues, and enquiries need to be sent, if the other party is slow to respond to, this can cause further delays.
Even if it’s not because of your own sale or purchase, if one part of the chain is being slow to respond, or dragging their feet, this can cause hold-ups all along the chain.
There’s also the risk of ‘gazumping’; when the seller accepts an offer from another buyer. Unfortunately, gazumping isn't illegal; your agreement with the seller is not legally binding until after contracts have been exchanged. If anyone in the chain does this, the whole chain is then impacted.
For more information on the conveyancing, read our complete guide to conveyancing for buyers and our complete guide for sellers.
Yes, your conveyancer will require the mortgage redemption statement to accurately calculate what is owed and inform both you and your lender. This statement must be requested well before the exchange of contracts to avoid any delays.
When selling your home, obtaining a mortgage redemption statement before exchange of contracts is a crucial step. This document outlines the exact amount needed to repay your existing mortgage and ensures a smooth transaction at completion. Without this statement, you risk delays, as your solicitor will need it to confirm how much of the sale proceeds will settle your current mortgage.
Typically, your conveyancer will handle this for you. They’ll request the statement directly from your lender and guide you through the next steps.
At My Home Move Conveyancing, we work with conveyancers that take care of the entire mortgage redemption process, ensuring everything is in order before you exchange contracts. Whether you’re selling or buying, they’ll guide you every step of the way, making the process as stress-free as possible.
Selling a home with an existing mortgage involves clearing the remaining loan balance, which is detailed in the redemption statement. Here's why it's essential:
Accurate calculations: It confirms the final amount due, including any early repayment fees.
Smooth Completion: Ensures all financial obligations are settled, avoiding legal or financial hiccups on completion day.
Clear Communication: Keeps both your buyer and mortgage lender informed, preventing unnecessary delays.
When buying a house, before your conveyancer can exchange contracts with the seller’s solicitor, your deposit (usually 10% of the purchase price) must have been paid and cleared in their account. Once the exchange of contracts has taken place, your conveyancer will then transfer the monies to the seller’s solicitor who will hold it in a client account until completion day.
If you’re in a chain when buying or selling, the exchange of contracts is the same process. However, all members within the chain need to be happy with the contracts and agreed completion date before the contracts can be exchange between each buyer’s and seller’s solicitor.
Once contracts have been exchanged, completion will typically take place within 7 to 14 days.
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