Exchange of contracts is an important step in the process of buying and selling a property in the UK. It marks the point at which the buyer and seller are legally bound to complete the transaction.
Before exchange of contracts takes place, both parties will have typically gone through the following steps:
- The buyer will have made an offer to purchase the property, which the seller has accepted.
- The buyer will have arranged for a mortgage, if necessary, and had a survey carried out on the property to identify any defects.
- The buyer’s solicitor will have carried out searches on the property to check for any issues that could affect the value of the property or the buyer’s ability to use it.
- The buyer and seller will have agreed on a completion date, which is the date on which the sale will be completed and the buyer will take possession of the property.
Once all of these steps have been completed, the buyer and seller can proceed to exchange contracts. This involves both parties signing copies of the contract and exchanging them, either in person or through their solicitors. At this point, an exchange deposit (typically 10% of the purchase price) will be paid by the buyer to the seller.
Once contracts have been exchanged, both parties are legally obliged to complete the sale on the agreed completion date. If the buyer fails to complete the purchase, they could lose their deposit and potentially face legal action. If the seller fails to complete the sale, they could be sued by the buyer for damages.
