Exchange and completion will always occur at the end of selling and buying a house. It is when the process becomes legally binding and then the big moving day.
In the UK, on average, you should schedule around two weeks between the time of exchange and when you complete. This can vary depending on the situation, but the time allows both parties to arrange removals, transfer bills, redirect mail, and acquire any mortgage funding.
In this article, we cover what the exchange of contracts is, what completion is and how you can speed up the process. Looking for something specific? Check out our interactive menu below:
- What Does Exchange Of Contracts Mean?
- What Does It Mean To Complete?
- Why Do Exchange And Completion Take So Long?
- How Long Between Exchange And Completion?
- What Is The Buyer’s Deposit On Exchange?
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What Does Exchange Of Contracts Mean?
The exchange of contracts is a term that coins the process in which two solicitors or conveyancers swap documentation to signify the transaction of property ownership. Usually, between a seller and buyer’s solicitors, it happens when an agreement is approved between the two. This is part of the conveyancing process, and you should have specialised solicitors to carry out the process, although you can do DIY conveyancing instead if that suits you better.
When you exchange contracts, both parties’ solicitors will have a signed contract, and the seller’s solicitor or conveyancer will hold the signed transfer title deeds. If applicable, the buyers’ solicitor should have any cleared deposit funds, the building’s insurance policy, and a mortgage offer.
What Happens At The Time Of Exchange?
At the time of exchange, there is a simple step-by-step process which takes place:
- Both solicitors will complete all paperwork and sign identical contracts – they will generally do this over the phone and read out loud to ensure everything is the same.
- Your solicitor will send you your contract for you to sign via the postal service. You will need to send this back; you can’t sign it digitally.
- A completion date will be agreed upon with all parties involved.
- Everybody in the chain should be lined up to exchange at the same time if you are in a chain. The solicitor will give the next solicitor up the chain a release time to confirm the exchange until all solicitors have confirmed the exchange. The exchange must then be established back down the chain to the first solicitors within the release timeframe. If it is not met within the timeframe, it must be restarted.
- The exchange is legally binding, and you must pay the deposit (usually 5-10% depending on your agreement).
Why Is The Exchange A Significant Part Of A House Sale?
The exchange of contracts is one of the essential parts of a house sale. It is the point at which the house purchase or sale becomes legally binding. If either party pulls out now, they will be in breach of contract and face penalties — and could even be liable to be taken to court by the other party.
What Does It Mean To Complete?
When you complete, it means that the house sale has been finalised and all the searches, queries and mortgages have been redeemed. You will also be given the keys to your new property if you move in.
Completion will occur when the seller’s solicitor confirms they receive the full purchase money.
What Happens At The Time Of Completion?
The buyer will be given the keys to the property at the time of completion. This is because the owner has been transferred from the seller to the buyer. If the property is part of a chain, both parties will need to liaise with solicitors and estate agents to ensure that the seller moves out on the same day the buyer moves in, which will need a lot of organisation and coordination.
Completion will usually happen seven to 28 days after the exchange, which allows ample time to draw up plans for the big day.
Why Is The Completion A Significant Part Of House Sale?
Completion is the peak of the house sale process and is the final stage before you can move in. It is critical to the house sale and the moment everything builds up.
Why Do Exchange And Completion Take So Long?
The exchange and completion process takes so long due to the request of both buyer and seller. But, there are other reasons why the average time to complete becomes extended, including:
- If the buyer is a tenant in a rented property, they will have to serve a notice which should only happen once the process has become legally binding.
- If you buy a new build, the actual building may be partially constructed, and there is a high chance of delays. You should agree with the developer for an extended stop completion date —- which means if the new build is not constructed after the completion date, you can claim compensation.
- Extended property chains can create problems for your timescale as other parties may have delays that will affect yours.
- It can take a while to redeem mortgages and vary depending on your mortgage lender.
What Can Cause Delays To Exchange And Completion?
One of the main reasons there is a delay between exchange and completion is mortgage redemption and money being transferred between solicitors. This is why cash buyers often tend to be favoured as they speed up the sale considerably.
There are many loopholes to jump through during the exchange and completion processes. When the solicitor requests the funds from the mortgage lender, there can be a wait while the mortgage provider sends the funds. If the funds have yet to be received by the seller’s conveyancer by 3pm, the completion date will be delayed.
Solicitors are often too busy with legal processes to stay in consistent contact with you, and it can be challenging to understand which stage they are at. If either party needs to arrange removals, then it can also cause delays as you try and coordinate everything to happen at once — and as we all know, life can throw some pretty large curve balls when we least expect it. Removal companies often need to book weeks in advance as they get fully booked quickly, so you can’t book them at short notice.
Can You Speed Up The Completion Process?
As we’ve stated, the average time to complete is two weeks, but it could be much faster. You could exchange and complete it on the same day, but this would create quite a lot of stress for all parties involved. Here are a few ways to speed up completion time:
- Keep All Legal Documents Together – At all times, it’s essential to keep any legal documents securely in one place. This is especially important for when you want to move house, these documents would include your; EPC, mortgage provider agreement, title deeds etc. Your solicitor or mortgage provider may wish to access these at any time.
- Make Arrangements – You should make any agreed arrangements in due time, as this can free up loose ends well before completion day. Have your removal company ready, tell your estate agent where you are leaving your keys, and have your friends prepared to help you unpack.
- Communication – You should always prioritise communication during any purchase or sale. It will allow you to be kept in the loop with your solicitors and the other parties solicitors. It also helps to give the buyer or seller a little push now and then to keep the house sale progressing.
- Cash Buyers – Waiting for mortgage redemption can be a hassle, so it will remove the mortgage redemption waiting period altogether if the buyer is a cash buyer.
Choosing A Quiet Day
Most people choose to move on a Friday as this will give them the weekend to move in and settle. But Fridays are the day your solicitors, mortgage providers and removal companies are the busiest during the week as multiple people will be completing that day.
If you choose a quiet day like Tuesday or Wednesday, you will minimise the risk of the house buyers or sellers pulling out (even after the exchange) and allow for a much smoother experience.
How Long Between Exchange And Completion?
On average, there are two weeks between exchange and completion, with some taking as long as twenty-eight days. But, it can be possible to do it on the same day. There are many buyers and sellers on the market that want quick transactions.
In some rare cases, exchange and completion can happen simultaneously, allowing you to complete on the same day. But, it can be very stressful between all parties involved, and many things can go wrong. Sometimes you may run into issues like paperwork needing to be completed on time, mortgage issues or delays in searches. Some mortgage providers will specify that there needs to be a minimum time between exchange and completion.
How Can You Make The Whole Process Less Stressful?
It can take quite an extended amount of time from house offer to completion, but the wait between exchange and completion often happens quickly. There are a few things to keep in my mind during this process so you can ensure that the transaction goes as smoothly as possible:
Once your solicitor hears about exchanging, it’s time to start organising all the different parts of the transaction. You should plan and schedule time for any problem that could arise during the process as it’s never going to be a smooth process ultimately, but you can make it easier by:
- Pack your boxes per room and label them with which room you want them to go in.
- Make sure you have booked a removal company, and they are ready for when you need to move.
- Plan your moving day, so you have a detailed schedule for when you want everything to be completed.
- You should also book enough time off work in due time.
Keep in regular contact with estate agents and solicitors to ensure you know what is happening. Things can change quickly, so having a clear line of communication can minimise any bumps in the road. The last thing you want is to have a delayed completion, it can become extremely frustrating.
Make sure you sign and return any documents quickly, as this is a vital part of the exchange and completion process. The quicker this stage is done, the faster you’ll be able to move into the property. Although, do still take the time to read through the documentation to ensure you understand everything going on.
On the day of completion, you will need to notify utility companies like broadband and television licences, royal mail and any other memberships that you have moved house; you should tell most of these companies before moving.
What Is The Buyer’s Deposit On Exchange?
When the buyer needs to pay a deposit at the exchange, this differs from the deposit that a mortgage provider requires. The deposit at the exchange will vary depending on your agreement but is usually five to ten per cent of the purchase price, which will be provided to the buyer’s solicitor as cleared funds. The buyer must ensure that they have sent the funds to their solicitor days before the exchange date.
Deposit During A Chain
When there is a property chain, the seller will often use the funds they have received from the buyer to pay for their onward purchase. The solicitor will pass up the deposit provided by the buyer at the bottom of the chain.
Peace Of Mind
The buyer’s deposit funds will give the seller peace of mind that the process is secure and both parties intend to proceed to completion, and if not, there may be space for compensation. The seller, however, can only access the deposit funds once the house transaction has been completed.
There is an exception to the rule; however, if the seller required the deposit to be paid on an onward purchase of a new build where the developer needs a deposit, then the funds would be paid and guaranteed by a New Build Guarantee Scheme.
And that’s all, folks! If you have any questions, please feel free to contact us!