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Exchange of Contracts

 
Exchange of contracts is where both buyer and seller become contractually bound to buy/sell the property - up until this point both you and the seller can pull out for any reason without penalty. Prior to exchange your solicitor sends you documents for signing including:

  • Contract of sale
  • TR1 Transfer Form
  • Stamp Duty Land Tax Form (SDLT)
  • Mortgage deed (if applicable)

After signing, never date these documents and make sure to return them special delivery to your solicitor.Your exchange deposit needs to be with your solicitor the day before you exchange so make sure the funds are available in your account. The exchange deposit is 10% of the purchase price, unless it has been agreed with the sellers to accept a 5% deposit. The bank details for the transfer are supplied by your solicitor when they send you contracts for signing.

On the day of exchange you need to email the solicitor confirming you are happy to exchange and then they will complete the exchange of contracts setting the completion date. If you are buying a freehold you must take out your building insurance policy on the day of exchange.
The average time between exchange and completion is a week, however it can be as long as both you and the seller are happy with.

The completion can take place on the same day as exchange, however you should only do this in an emergency as timing drawing down mortgage funds, getting ready for completion and moving out all on the same day is incredibly difficult.
 

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You should organise your buildings insurance to start on the day of exchange because you are contracted to buy the property from this point and are responsible for it in the event of a disaster.

You should inspect the property before you exchange and also take note for insurance quote purposes of the following:

  • security/locks on the doors
  • alarm system (if any)
  • type of structure and age of the property
  • type of roof

Make sure you update your insurer with any changes to your property once you move in.