House exchange of contracts is a critical stage in the home buying process. It`s the point where the buyer commits to purchasing the property, and both parties become legally bound to the transaction. Here`s how it works.
Firstly, it`s important to understand that the exchange of contracts is not the same as completion. Completion is when the buyer takes possession of the property, and the seller receives the funds.
Once the buyer has had their offer accepted and the legal work has been completed, both parties will agree on a completion date. This is typically a few weeks after the exchange of contracts.
On the day of exchange, both parties` solicitors will exchange signed copies of the contracts. This can be done by post or electronically. The buyer will also need to pay a deposit, typically 5-10% of the purchase price, to the seller`s solicitor.
Once the exchange has taken place, both parties are committed to the transaction. If either party pulls out, they risk losing their deposit and may face legal action. This is why it`s essential to have everything in order before agreeing to exchange.
After the exchange, the buyer`s solicitor will register the transaction with the Land Registry. This is a government organisation that keeps a record of all property ownership in England and Wales.
On the agreed completion date, the buyer`s solicitor will transfer the remaining funds to the seller`s solicitor. Once this has been done, the keys can be handed over to the buyer, and the property officially becomes theirs.
In summary, the house exchange of contracts is the point in the home buying process where both parties become legally bound to the transaction. Once the exchange has taken place, neither party can pull out without facing legal consequences. It`s essential to have everything in order before agreeing to exchange and to understand that completion is a separate stage in the process.