The last two steps to get past in the home buying process involve exchange and completion. After the exchange, the property purchase is legally binding, however, only at completion does the buyer become the legal owner of the property with the right to move in.
Here, we put the end stages of house buying under the microscope and explore what exchange and completion mean, what they involve and when they happen. Read on to update your understanding of these key steps required to purchase a property.
Exchange of contracts
Sometimes referred to simply as “the exchange”, the exchange of contracts happens before completion and makes the buying and selling transaction legally binding. Exchange means that the seller and buyer have both signed a contract stating that they agree to the property sale. After signing occurs, the contracts are swapped between the property solicitors that represent the seller and buyer. Solicitors may call each other and confirm receipt of contracts or read them aloud during a call to ensure they are identical.
As the contract is a legally binding, there are financial repercussions if either party attempt to pull out. For instance, at exchange buyers have paid a deposit to the property seller. In most cases, this is approximately 10% of the sale price. If the buyer withdraws from the sale after the exchange, they lose this deposit. However, if a seller pulls out at this point, they are in breach of contract which means the buyer can sue them for damages. This can include covering mortgage arrangement fees, removal costs, legal fees, survey costs, legal fees, and more.
It is critical for buyers to carry out due diligence before exchanging contacts when a property is sold “as is”. After exchange, any issues with the condition of the house become the buyer’s responsibility.
After the solicitors have swapped contracts, a completion date will be set that both parties agree on. The buyer’s solicitor will then ensure that all conditions of the buyer’s mortgage have been answered. The buyer’s lender then sends money for the purchase to the solicitor ready for completion.
Completion
Most of the work involved in house sales has been finished before contracts are exchanged. As a result, there’s no need for a long gap between exchange and completion. In some cases, buyers and sellers exchange and complete in a single day. However, as this can be tricky to organise, it’s a practice not usually recommended. Usually, completion takes place with seven to 28 days between the two steps.
On the completion date, the final step of the property-buying process takes place. At this point, legal ownership transfer makes the buyer the owner of the house. A final payment consisting of the remaining money required cover the total sale price of the property is transferred to the solicitor representing the seller on the day of completion. The solicitor must confirm they have the cleared funds before the sale can be finalised. After confirmation, the solicitor transfers property ownership to the buyer. This key step is completed by contacting the Land Registry and listing the buyer as the property’s new owner.
On the day of completion, the seller has until 1 pm to move out of the property. The keys are then handed over to the buyer either from the seller or by their estate agent. The buyer can then move into their new house. The last task to complete is to pay stamp duty. The buyer’s solicitor will generally handle this job after the money has been transferred to them.
Do you need help with conveyancing in North Wales?
Home buyers are always advised to use a conveyancer to handle the legal complexities of their property transaction. Conveyancers can ensure all legal steps are correctly completed and provide valuable legal support and advice from start to finish. Conveyancing teams are trained in investigating titles, carrying out property searches, handling legal documents, and managing the secure transfer of funds.
At Bennett Smith Solicitors, our team includes highly skilled conveyancing solicitors for North Wales property sales. To discuss a property that you intend to buy with our team, connect with us today for any assistance required.
