Exchange of Contracts – checklist
Under the crazy English homebuying system, until you reach Exchange of Contracts, both buyers and sellers are entitled to change their minds and pull out for any reason. This can happen after many months of apparent commitment, without penalty.
So getting to Exchange is a BIG DEAL!
But before you finally get winched up to safety there are some key points that must be checked:
*Has your mortgage offer been received – and is it correct?
*Have your funds to pay the deposit cleared into your solicitor’s bank account?
*Your survey didn’t raised any major worries?
*Your legal searches didn’t raise any major worries?
*Both sides’ solicitors are satisfied with the contract?
*A mutually acceptable completion date has been agreed?
*Buildings insurance cover has been arranged on the property?
‘Exchange’ normally involves each side swapping identical copies of the contract documents, one signed by each party. In practice, however, contracts are actually ‘exchanged’ verbally by one solicitor phoning the other, the documents following later.
Your solicitor will forward the deposit funds to the seller’s solicitor and the other side holds this money until completion. Normally you should receive a phone call confirming the good news directly exchange has taken place, at which point a celebration may be in order.
Once contracts have been exchanged you can breathe a sigh of relief, since the deal is binding on both sides. It is highly unlikely that anything will go wrong between exchange and completion. If you pull out now you can say goodbye to your deposit. Indeed, either side backing out could suffer draconian penalties, being open to legal action for all the abortive costs and legal fees.
However it’s not entirely unknown for problems to arise at this stage, for example one of the parties could go bankrupt or decide to get divorced. But within the space of a week or two this is highly unlikely.
Our next blog – coming soon …….
Exchange of Contracts – making sure nothing goes wrong
Check out our Rightsurvey blog page for more industry tips and secrets written by property professionals to help put you in control.