What is Exchange?

The term commonly known as 'Exchange' refers to when solicitors 'exchange signed contracts' and it's the point when a property transaction becomes legally binding. After this it is unlikely that either party will withdraw as there are significant costs involved.

Reviewing the contracts

Before exchange signed contracts are needed. The seller usually signs their part of the contract early in the process however the buyer usually has to wait for the conveyancer to perform all the legal work before they can “report” to them.

A report is when a conveyancer puts together all the information about the property for the buyer to review.

Some firms report in stages and others in one go. A property report is a fair bit of reading but well worth it for the amount you are investing!

Pay particular attention to all the finer details before signing the contract as it may be too late to do anything about them after exchange. You need to check the spelling of your name(s), the sale price, deposit payable, property address and the final fixtures and fittings list included. It’s also important that you understand any covenants or restrictions on the use of the property. If you don’t, then ask the conveyancer to explain them.

Being exchange ready

Once all conveyancers in the chain are ready and holding signed contracts, they will check the completion date with their clients. Any deposit payable will have already been paid to the conveyancer. If you need to pay a deposit then your conveyancer will tell you the best payment method.

People are worried about committing to a contract the minute that they sign it – this is not the case!  You will be contacted to check that you authorise exchange and at that point you need to provisionally check with your removal company that they can move you on the proposed completion date, do not make a firm booking, but ask them if they will hold the slot for a few hours. So only say yes to exchange once you have checked this!

If you need to arrange buildings insurance for the property, then at this point you need to have a quote that you are ready accept and put on risk.

Contracts are exchanged by the telephone, it’s like playing telephone tag – using a formula which “releases” contracts for an agreed time, thereby linking chains together to enable everyone to be locked in whilst the process of exchange occurs. If contracts have been released, this means that the exchange process has started, but exchange might not happen that day because time deadlines are imposed for the exchange to take place. Sometimes conveyancers are stuck in a meeting, so if for any reason the release doesn’t go to plan, they will resolve any issues holding the process up and try again the next working day.

Who decides the completion date?

The date for completion is agreed by all parties in the chain prior to exchange. It’s a good idea to put a few dates together as finding a date to suit everyone can be quite difficult! Ensure you speak to your conveyancer to ask whether a certain time is needed between exchange and completion - particularly if you are having a mortgage. If you are using a removal company, it’s also advisable to run the dates past them before committing.

Same day Exchange and Completion

You can exchange and complete on the same day, however this generally applies to those who are cash buyers without a chain. Same day exchange and completion requires a higher level of trust between buyers and sellers as either one could withdraw from the transaction at any point before exchange - including the day you were planning to exchange, complete and move!

What can go wrong between exchange & completion?

As with everything in life, nothing is guaranteed, although it’s not a common occurrence. Here are some things to watch out for:

• The mortgage company could withdraw their offer
• Something could happen to one of the parties i.e. death or serious illness
• A dispute could arise relating to the property
• One of the parties in the chain decides not to complete
• Something happens to the property e.g. damage - one of the reasons why buildings insurance is needed at the point of exchange!

The good news is, once exchange has taken place, it's highly unlikely that the transaction will fall through.