What does 'Exchange of Contracts' mean exactly?
Nov 10, 2016
Exchange of contracts is a term used during the conveyancing process. When you buy, or sell a house there is a legal process to follow and the exchange of contacts is an important part of this process.
Exchanging contracts in England or Wales is the part of the conveyancing process when the transaction becomes legally binding, so it’s important to understand where this part sits in the whole process and that you know what exchanging contracts means.
When you buy a property, you make an offer. Once the offer is accepted by the seller, you’ll start the legal side of the conveyancing process.
You’ll need to appoint a solicitor at this point to complete the usual aspects of a property purchase. We’ll look at the steps that lead up to the exchange of contracts and then look at how and what exchange of contracts is.
Your solicitor will request a draft contract from the seller’s solicitor along with the title of the property and all the other necessary documents. Your solicitor will also complete all the necessary searches on the property. These will check that there are no issues that you need to be aware of before you commit to buying the property.
Your solicitor will review the draft contracts from the seller’s solicitor and they will be making enquiries about any issues that are in the draft contracts. This will include a list of fixtures and fittings that are included in the purchase.
You will also need to agree a completion date before you exchange contracts. This is usually around 4 to 12 weeks after you exchange contracts.
Before you can exchange contracts, you’ll need to arrange to transfer over your deposit to your solicitor’s bank account. It needs to be cleared before contracts can be exchanged. The deposit amount is usually 10% of the purchase price, but you could negotiate a different amount.
Once all of this is done, a date will be agreed on to exchange contracts. Once the date has been arranged, your solicitor will exchange the contracts on your behalf. This normally happens with both solicitors or conveyancers on the phone together. They read the contracts to each other to make sure they are exactly the same. Once confirmed that they are identical, they will send the copies over in the post.
Once this part of the process is done, you have a legal obligation to continue with the purchase.
If you need help with buying or selling a property, please call and speak to one of our experienced conveyancing team on 01264 353411, via email: firstname.lastname@example.org or alternatively, by completing our free, no obligation online enquiry and we’ll be in touch soon.
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