Attended Exchange of Contracts: Beware the Pitfalls

by:

Andrew Boast

Updated:

27/11/2017

Read by:

3,772

4 min read

An attended exchange of contracts describes a type of conveyancing aimed at exchanging contracts as soon as possible.

The word ‘attended’ refers to the fact that a vendor and buyer meet in person, with each being accompanied by their own conveyancing solicitors. The solicitors on both sides work to bring negotiations to a conclusion as quickly as possible, normally within a day.

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Why have an attended exchange of contracts?

The key point is that either one of or both sides want to progress the sale as quickly as they can. The buyer may have a very strong interest in a property - for example to develop it - or a seller may wish to secure cash from a property sale as soon as possible or, less positively, a seller might know there is some issue with the property and wants to be rid of it as soon as possible.

Read on to find out more about how an attended exchange of contracts work and what the advantages and disadvantages are...

How does an attended exchange of contracts work?

Normally the solicitor representing the buyer goes to the offices of the seller’s solicitor and both sides work through the sale papers before exchanging contracts on the same day. Both buyer and seller are normally present at this meeting. Failing that, they would at the very least be available immediately by phone so that any issues that may arise can be resolved as quickly as possible.

What are the advantages?

For a seller, the buyer’s commitment is clear from the outset.
For a buyer, there is almost no chance of being gazumped.
Difficulties may be ironed out more easily because all parties are working towards a successful exchange.
Negotiation is more direct because all parties are ‘in the same room’.Parties, because they are looking to conclude business within the day, are less likely to lose focus on superficial detail.

What are the disadvantages?

No ‘cooling off’ period/ time for consideration.
Buyer may get ‘carried away’ and fail to investigate important issues.
Buyer is reliant on fair and reliable information from the seller’s solicitor as well as appropriate experience from their own legal representatives; no time has been allowed for normal information gathering such as the results of a home buyer’s survey and returned property searches.
Expensive – you have to pay for the time of one or more experienced conveyancing solicitors.
Buyer’s solicitor is away from their normal office/resources etc.

Caveat emptor - to the extreme…

Attended exchange of contracts, from a buyer’s perspective, is one of the riskiest forms of conveyancing. Although the principle ‘caveat emptor’ applies throughout conveyancing, exchanging contracts on the same day gives no time to do even basic checks on a property’s soundness.

It is for this reason that as a rule it is only cash buyers who can take part in an attended exchange. Mortgage lenders require people buying with the aid of mortgages to pay their own money towards establishing that the money lent by a lender towards buying a property is a ‘good’ risk.

This is why buyers have to pay for a mortgage valuation, are expected to book at least four property searches and are normally encouraged to pay for a home buyers survey.

Everything in favour of the seller

For a buyer with reasonable cash reserves, an attended exchange is a way to tie a deal up fast but it is likely to be expensive. It also puts all the risk on the buyer, who chooses to relinquish many of the essential checks most people wish to carry out before spending vast sums on a property.

Many of the principles of conveyancing work to limit a buyer’s risk. In contrast, an attended exchange places all management of risk into the hands of the solicitors involved. These need to act with integrity and efficiency.

A buyer can find themselves taking ownership of a property which has issues which they did not know about at exchange. This can naturally affect future resale value.

In sum, this is not an exercise for the faint-hearted, even though the practice can work for certain situations. It is always advisable to gather as much relevant information as possible before choosing to spend vast sums of money.

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*Attended Exchange Specialists – CQS Solicitors - 0333 344 3234