Exchanging Contracts and Completion – Step-by-Step Guide
When buying or selling a property in the UK, exchanging contracts and completion are two critical steps in the process. These steps involve legally binding agreements between the buyer and seller, which make it important to have a thorough understanding of the process. In this article, we will provide you with a step-by-step guide on exchanging contracts and completion.
1. Introduction to conveyancing
1.1 Appointing a Conveyancer
Before exchanging contracts, you should appoint a conveyancer. A conveyancer is a legal professional who will guide you through the process, ensuring that everything is legally binding and protecting your interests. They will handle the paperwork, conduct property searches, and negotiate on your behalf.
Related resources for further reading:
- Why is choosing the right conveyancer important?
- Process of appointing a conveyancing solicitor
- Tips to choose the right conveyancing solicitor?
- Finding the best conveyancer
1.2 Agreeing your Conveyancing Costs Terms Upfront
One of the biggest complaints against conveyancing lawyers is their lack of cost transparency. Many conveyancers send out an email quote but not their full charging cost terms until later. That’s unacceptable because if you sign up before seeing their full teams, you cannot then later challenge your conveyancer’s costs when they send you their bill. So, before instructing your conveyancer you must agree on the terms of their retainer with you. Their terms must come out to you with their quote estimate. It must specify what work they will do for their basic costs and a list of any potential options you can choose from, but only charged if you need them. If they don’t show these terms upfront then you are at risk of paying a lot more than you budgeted for. Also, be careful with conveyancers who charge you a higher upfront fee to include optional services as a bundle, but that risks you paying a lot more upfront if you don’t need these later on.
2. Preparing for Exchanging Contracts
2.1 Conducting Property Searches
Your conveyancer will conduct property searches to identify any issues that may affect the property’s value or use. These searches may include local authority searches, environmental searches, and water authority searches. The conveyancer will advise you of any potential issues that may affect the purchase or sale of the property. Some areas around the country may need specific searches. For example, if the property is near old coal mining or tin mining area. For a full set of searches click this link for example searches. But your conveyancer will advise you on what searches are right for you. Getting the wrong searches could end up you missing out on finding potential defects found in those searches. And because of the legal doctrine of ‘caveat emptor’, buyer beware, it means you, the buyer will end up paying for putting right all the defects you missed out on by not ordering the right searches.
- What searches do conveyancers do?
- What is a local search in conveyancing?
- What is the conveyancing process?
- Transfer of equity: Home conveyancing guide
- Documents required for conveyance deed
- What is a home buyer report? Level 2 survey
2.2 Agreeing the terms of your sale and purchase contract
You must work with your conveyancer to give them your full instructions. This includes the purchase price, and any conditions of the sale, completion dates, speed of transaction. Your conveyancer will advise you on the legal implications of the terms and ensure that they are legally binding.
2.3 Signing the Contract
Once the terms have been agreed upon, your conveyancer will prepare the contract. You will need to review and sign the contract, and your conveyancer will do the same on your behalf. The contract will then be exchanged with the other party’s conveyancer.
2.4 Paying the Deposit
At the point of exchanging contracts, you will be required to pay a deposit. This deposit is usually 10% of the purchase price and is held until completion. It acts as security for both parties, ensuring that the transaction goes ahead as planned.
3. Exchanging Contracts
Exchanging contracts is the point at which the transaction becomes legally binding. Once the contracts have been exchanged, both parties are committed to the transaction, and the completion date is fixed. The exchange of contracts is usually done by the conveyancers, who will exchange signed copies of the contract and transfer the deposit.
Consequences of Backing Out
Backing out after exchanging contracts can have serious consequences. If you do so, you may lose your deposit, and the other party may take legal action against you. It’s important to ensure that you’re committed to the transaction before exchanging contracts.
4. Preparing for Completion
Agreeing on the Completion Date
Before completion, you will need to agree on a completion date. Some conveyancers will liaise with the other party’s conveyancer but this just slows everyone down. It is far easier and more secure, for the buyer and seller to talk to the estate agent to agree on a mutually agreeable completion date, and then let the conveyancers know. Ensure that the date is suitable for both parties. It’s important to ensure that you have enough time to prepare for the move, such as arranging removals and changing your address.
Transferring the Remaining Funds
Before completion, you will need to transfer the remaining funds to your conveyancer. Your conveyancer will handle the transfer of funds to the other party’s conveyancer. However, don’t transfer these too late. They must be in your conveyancers account at the very least between one day, better still two to three days, before completion as so many things can go wrong with late receipt of funds. If that happens the penalties for non-completion can run into thousands of pounds.
Signing the Transfer Deed, known as the TR1
Once the funds have been transferred, you will need to sign the transfer deed. The transfer deed is the legal document that will pass along ownership of the property from the seller to the buyer. To make sure everything goes smoothly and according to the law, your conveyancer will manage this process for you.
Handing Over the Keys
On the completion date, the seller will need to hand over the keys to the property to the buyer. This can be done in person or through your estate agent. It’s important to ensure that the property is clean and tidy before the seller hands over the keys. If not, the seller could be in breach of contract.
After completion, the buyer’s conveyancer will register the change of ownership with the Land Registry. This process can take several months to complete because of Land Registry backlogs, but once it is done, the buyer will officially be the owner of the property.
After completion, there may be issues that arise, such as Land Registry Requisitions. Your conveyancer can help you with these and any that may arise and ensure that they are resolved as quickly and efficiently as possible.
Find the best conveyancers for first-time home buyers:
- Property conveyancing lawyers in Romford
- House conveyancing solicitor services in Portsmouth
- Experienced conveyancers in Plymouth
- Residential conveyancing solicitors in Peterborough
- Best conveyancing lawyers in Norwich
- Conveyancing lawyer services in Nottingham
- Conveyancing services in Royal Tunbridge Wells
- Conveyancing property lawyers in Winchester
- Licensed conveyancers in Barnet
Exchanging contracts and completion are two critical steps in the process of buying or selling a property in the UK. It’s important to appoint a conveyancer early in the process to guide you through the process and protect your interests. By following this step-by-step guide, you can ensure that the process is smooth and legally binding.
Q: What is a conveyancer, and why do I need one?
A: A conveyancer is a legal professional who specialises in property law. They can guide you through the process of buying or selling a property and ensure that everything is legally binding.
Q: Can I exchange contracts before agreeing on the completion date?
A: It is possible to exchange contracts before agreeing on the completion date, but it’s not recommended. It’s best to agree on the completion date before exchanging contracts to ensure that
everyone is committed to the transaction.
Q: What happens if I back out after exchanging contracts?
A: If you back out after exchanging contracts, you may lose your deposit, and the other party may take legal action against you. It’s important to ensure that you’re committed to the transaction before exchanging contracts.
Q: How long does it take to complete the process of buying or selling a property?
A: The process of buying or selling a property can take several weeks to several months, depending on the complexity of the transaction.
Q: What should I do if I have post-completion issues?
A: If you have post-completion issues, you should contact your conveyancer as soon as possible. They can help you with any issues that may arise and ensure that they are resolved as quickly and efficiently as possible.