EXCHANGE & COMPLETION - WHAT DOES IT MEAN?
Once you get into the legal process of your property transaction, you are likely to come across a number of legal terms you might not be familiar with.
Let's start with "exchange" and "completion".
These are two significant stages in the process of buying or selling a property. They mark crucial points in the legal and financial aspects of the transaction.
Here's the AskJoanna breakdown of each step
Exchange refers to the exchange of contracts. This is a pivotal moment in the property buying and selling process. It occurs after both the buyer and seller have agreed on the terms of the sale, including the price, completion date, and any special conditions.
Before the exchange, both parties' solicitors or conveyancers will review the contract details, conduct searches, and address any enquiries or concerns. Everyone will need to be happy with the information provided and the situation before proceeding.
On the exchange day, both parties sign identical contracts, and the solicitors or conveyancers swap the signed contracts – this is the ‘exchange' bit. The exchange will most likely happen virtually or digitally with original copies being sent in the post.
At the same time, a deposit is usually paid. This is often 10% of the purchase price and the buyer will need to provide this amount to their solicitor or conveyancer prior to exchange so it can be passed to the seller's solicitor at the point of exchange.
Once the contracts are exchanged, the agreement becomes legally binding, and neither party can withdraw from the transaction without facing financial penalties.
Completion is the final stage of the property transaction and typically takes on a date after the exchange of contracts. The exact completion date is agreed between the seller and the buyer at the point of the contract exchange.
On completion day, the buyer's solicitor or conveyancer transfers the balance of the purchase price to the seller's solicitor. The seller's solicitor confirms receipt of funds, and both parties' solicitors will then authorise the estate agents to ‘release the keys' to the buyer.
At this point, legal ownership of the property is transferred from the seller to the buyer, and the buyer officially becomes the new owner of the property.
The seller must vacate the property by the completion date, leaving it in the agreed condition, and hand over the keys to the buyer.
Throughout the process of exchange and completion, it is essential for both buyers and sellers to have their own solicitors or conveyancers representing their interests. The legal professionals handle the necessary paperwork, ensure compliance with legal requirements, and help navigate any potential issues or challenges that may arise during the transaction.
We have not covered off in this blog every step that the solicitors or conveyancers may cover in the process. We aim to give you this information in other blogs, on our site, or in our downloadable Guides. Our aim also is to make the whole legal process much more streamlined for everyone.