What is ‘Exchange’ of Contracts and, what does it mean?
Understanding what Solicitors are talking about when they say ‘you are under contract’ or have ‘Exchanged Contracts’
In the conveyancing process, during the sale or purchase of a home, certain terminology is used that that you may never have heard before or forgotten what it means if you have.
After draft Contracts have been issued and the solicitors have applied for and received their ‘Searches’ back and, they have raised ‘Enquiries’ and had them satisfied and, if a mortgage is required are in receipt of the ‘Mortgage Offer’ then they will be in a position to discuss ‘Exchange’ and ‘Completion’ dates.
This usually takes between 6 weeks and 6 months with the average being 12 weeks. Solicitors now advise that they expect a home sale to take 12 weeks.
’Exchange’ cannot take place without a ‘Completion’ date being agreed or, if you are buying a new build property you may be given a ‘long stop completion date’. This is a date set further into the future (potentially 6 months) and is a ‘last resort’ date but completion may take place anytime before that date once the property is available to move into.
On the day of Exchange your Solicitor must be able to contact you to get your agreement to exchange. This is part of their final checks carried out to ensure that nothing has cropped up and, to make sure you haven’t changed your mind.This is because up until this point either party can withdraw from the sale or purchase without penalty.
Exchange is the formal exchange of contracts and promise to pay the funding on completion day.
It is advisable to have two weeks between exchange and completion. This gives you time to organise removal firms and reduces pressure if things should go wrong or be delayed. The last thing you want on moving day.
It is extremely rare that Completion does not take place after contracts have been Exchanged. I’d buyers have paid 10% deposit at Exchange they will forfeit that money.
If you want help with any other property related terminology you might like to take a look at our guide using this link