How to Exchange Contracts
The exchange of contracts is easily one of the most exciting parts of selling or buying a home. After all, once that exchange takes place, you are legally committed to buying or selling your property. While it’s an exciting day, it can also be a fairly complex one that is usually a long time coming, leaving many to wonder how long to exchange contracts on the house. If you’re one of the many people wondering how long it takes to exchange house contracts, don’t worry. We can help. Understanding the process of how long to move house after the exchange of contracts is a little complex, but this quick guide will tell you all you need to know.
An Overview of the Home Buying Process
If you’re a first-time buyer or seller, you may not quite understand how the overall process works, and knowing that is the key to understanding where the exchange of contracts fits into the bigger picture. A home sale works like this. The seller places his or her home up for sale through an estate agent or privately. A buyer walks into the picture, likes what he sees, and then makes an initial offer. The seller accepts the offer, then the solicitors get involved. There are many different steps involved for the solicitor, but they typically involve looking at the title deeds to make sure they’re clear and then having the various inspections, valuations, and surveys done on the property. Once everyone is satisfied this home is a worthy investment, the draft contracts are exchanged. These are really just practice options for both sides to review with their solicitors. Inside will be elements like the names of those involved, the conditions of the sale (like work that must be done or repairs that should be made), the purchase price of the home, and the date of completion. Any changes that must be made should be done to the draft contracts. When everyone is satisfied, how long to move house after the exchange of contracts is complete is just a matter of time. Once the actual contracts are exchanged, all that’s left to do is await completion day.
Why Are Contracts Part of the Process?
Why do contracts even affect the process? Why do so many people wonder how long to move house after the exchange of contracts? Until the contracts are exchanged, no one has a legal obligation to buy or sell the property. In fact, you (whether you’re a buyer or a seller) can leave at any time without a penalty. If a deposit on the agreeing offers was made, the buyer might forfeit that, but that’s usually a fairly small amount. The buyer and the seller must sign the same contracts when they’re formally exchanged if they’re to be legally binding. Once that’s done, the contract is legally binding, and if either side tries to pull out, there are quite a few penalties involved. That said, it’s fairly rare for anyone to pull out of a sale at that point. In fact, it’s at this stage when both buyers and sellers tend to breathe a sigh of relief that everything is done.
How Long Does it Take to Exchange House Contracts?
Many people wonder how long it takes to exchange house contracts. In most cases, how long to exchange contracts on the house depends a bit on the overall situation of the buyers and the sellers, but typically it takes anywhere from a week to a month. It can happen on the day of completion, but that’s fairly rare. Before contracts are exchanged, you must ensure you have everything in order. Don’t exchange contracts until you’ve reviewed the draft contract. It should have a purchase price that includes fixtures and fittings that the two of you agree on. It should only happen after the mortgage valuation has taken place, as well as any other surveys required by the buyer. It should also only happen after the buyer has a formal offer for a mortgage in writing. Additionally, the buyer should have arranged for funding for the mortgage deposit. You’ll want to ensure the buyer’s solicitor has done any relevant title searches, and arrangements for buildings insurance have been made. The contract deposit should be sorted as well, as should the day of completion.
Make certain you do not exchange contracts until you have read, understood, and signed them! The last thing you want to do is be frustrated by the terms of a contract once it has become a legally binding document.
Working on the Home After the Exchange of Contracts
In most cases, it is possible to continue to work on the home between the exchange of contracts and Completion Day, but a side legal agreement has to happen. Fortunately, if you’re wondering how long to exchange contracts on a house, this process doesn’t affect it. It’s called a “Key Undertaking.” This is usually the case if a property is vacant and it requires some work for buyers to be able to move in or if the survey found issues where remedial works needed to be carried out on the property and the seller needs to do that during that process. Either the buyer will need to be granted access to the property during that time or the seller will be responsible for those works occurring. As long as the two parties agree on what must be done, this is a fairly routine agreement for a solicitor to handle.
How to Exchange Contracts on a House and Complete the Sale on the Same Day
While it is legally possible to exchange contracts and have your day of completion on the same day, it is incredibly stressful. Sure, it has some advantages. Conveyancing is much faster, and there’s no need to pay a deposit, but you don’t definitely know the sale is going through until the day it does, and that can make it tough to arrange for a removals company and to forward your post. Moreover, should anything go wrong, you may not have time to make it right before the sale takes place. Instead, the seller will need to have everything completely packed and the removal process ready to go while you’re exchanging contracts. If you’re really concerned about the idea of how long to exchange contracts on a house, this is the process for you, despite the drawbacks.
If, however, it makes sense to exchange contracts on the day of completion for your sale, there are a few things you’ll want to do. First, note that this should only be done if both the buyer and the seller are chain free. Then you won’t have to worry about anyone else messing up the process. Next, it can be far easier for both the seller and the buyer if the buyer isn’t working with a mortgage company but instead is a cash buyer. Mortgage lenders can significantly delay the process, and cash buyers can avoid that hassle. If the buyer is working with a mortgage lender, he or she will want to be sure the lender is happy to have the contracts exchanged and competition day on the same day. Some require a minimum working period between those two days, so make certain they’re involved with the process. As a buyer working with a mortgage lender, be sure the funds have been transferred to the solicitor on the previous day so there are no money transfer issues on the day the sale is to take place.
How to Exchange Contracts on a House – Actually?
If you’ve never been part of this process before, you may wonder how to exchange contracts on a house in a very real fashion. Typically, both of the Conveyancing solicitors involved in the process read the contracts over the phone. The call is recorded. The contracts must be identical. Then the contracts are immediately sent to each other in the post. Once that’s complete, the contracts become legally binding, which means that pulling out means a lost deposit or a lawsuit. When the exchange of contracts is complete, the next big day is the day of completion, or when the seller hands the keys to the property over to the buyer, and he or she takes possession of the property. Before that day happens, the buyer and his or her estate agent should visit the property to ensure all of the agreed-upon fixtures and fittings are in place and there are no damages. The buyer should also get a copy of the title deeds to their mortgage lender who will hold onto them until the loan is paid in full. If the property is a leasehold, the seller should notify the freeholder. The solicitor should register the transfer of ownership with the land registry, too. The buyer will need to tell the utility companies about the change in ownership. Both the buyer and the seller should organise post forwarding and change the address on their driving licenses. Additionally, both parties may need to arrange for removals services.
While the solicitors usually handle the process of the contract exchange, it is possible for a buyer and a seller to attend the exchange of contracts. Usually, this is called an attended exchange of contracts, and in these situations, both the buyer and the seller meet with their legal representatives to come to an agreement on terms. It happens most frequently when either party really wants to push the transaction forward as fast as possible. If a buyer is wondering how long it takes to exchange contracts, house sellers are likely wondering the same thing, and this process can help speed things up. For example, the buyer might want to own the property as fast as possible, particularly if it’s an investment or the seller may need to get rid of the property to release the equity involved. This is a good way to move forward fast for both parties, but it can usually only happen for cash buyers. Mortgage lenders need additional time, and this kind of option doesn’t allow for that added time. The benefits of an arrangement like this one are clear. The seller has a committed buyer and the buyer eliminates any risk of being gazumped. Moreover, there’s virtually no need for negotiation, and generally, small problems won’t delay the sale of a home in these cases.
Ensuring Completion Day Goes Smoothly
Completion day is an exciting end to the exchange of contracts, and there are things both parties can do to make it go smoothly. Everyone should plan ahead for the move. The seller should already have his or her things out of the property as soon as contracts are exchanged. In fact, once that happens, it’s a clear signal to line up a removals company and begin packing well ahead of time. The buyer, too, should be lining up their own removal company and preparing to move in. If the buyer isn’t part of a property chain, though, they may have some extra time on this step that the seller doesn’t have.
Both parties should remain in communication with their conveyancing solicitors, as that’s the only thing that can really hold up the process after the contracts have been exchanged. Most solicitors will have their full attention on the transaction to ensure it’s processing smoothly and can be completed as quickly as possible, but remaining in contact with the solicitor can help you deal with any issues as they come forward.
The buyer needs to ensure they have all of their funds in order and in one account ready for the transfer well ahead of time. If the buyer cannot transfer funds on completion day, they will be fined. If the lack of funds is the result of a property chain problem, the other property buyer at the end of the chain can be fined, too, so it’s best to be sure everyone remains in contact to make sure the sale goes smoothly.
Both the buyer and the seller decide on the day of completion well in advance. It must occur on a working weekday so the banks can transfer the money appropriately and the solicitor is available, but outside of that, you can choose any day or time you like.
Prepare to Exchange Contracts Early
Whether you’re a buyer or a seller, you must learn how long it takes to exchange contracts. House sales demand this process, and preparing to exchange contracts as early as possible is an absolute must. To learn more about the process or to help ensure the contract exchange goes smoothly with your sale, talk to your estate agent and solicitor.