What Happens Just Before Exchange of Contracts
The exchange of contracts is the final step in the process of buying or selling a property in the UK. It is the moment when both parties become legally bound to the transaction, and it usually takes place a few weeks after the offer has been accepted. But what happens just before the exchange of contracts? In this article, we will guide you through the steps leading up to this important moment.
1. Conveyancing
Conveyancing is the legal process of transferring the ownership of a property from one person to another. It involves a lot of paperwork, legal searches, and due diligence. The solicitor or conveyancer acting for the buyer will carry out all the necessary checks to ensure the property is legally sound and there are no issues that could affect the sale. This includes checking the title deeds and any legal restrictions or planning permissions on the property.
2. Mortgage offer
If the buyer is financing the purchase with a mortgage, they will need to have a mortgage offer in place. This is a formal agreement from a lender to provide the buyer with a loan to purchase the property. The offer will usually be valid for a certain period, and the buyer will need to make sure they can meet all the conditions of the offer before exchanging contracts.
3. Signing the contract
Once the buyer`s solicitor or conveyancer has completed all the necessary checks and the mortgage offer is in place, they will send the contract to the seller`s solicitor for review. The contract will contain all the details of the sale, including the purchase price, any fixtures and fittings included in the sale, and the completion date. The seller`s solicitor will review the contract and make sure everything is in order before sending it back to the buyer`s solicitor for signature.
4. Paying the deposit
Before the exchange of contracts can take place, the buyer will need to pay a deposit. This is usually 10% of the purchase price, but it can vary depending on the terms of the sale. The deposit is held by the seller`s solicitor until completion and acts as security for the seller in case the buyer fails to complete on the purchase.
5. Exchange of contracts
Once all the necessary checks have been carried out, the mortgage offer is in place, the contract has been signed, and the deposit has been paid, the buyer and seller are ready to exchange contracts. This is usually done over the phone, and both parties` solicitors will confirm that the contracts have been exchanged. At this point, both parties are legally bound to the sale, and completion will normally take place within a week or so.
In conclusion, the period leading up to the exchange of contracts is a crucial time in the property buying process. It involves a lot of paperwork, legal checks, and due diligence to ensure that the sale can go ahead smoothly. Once the contracts have been exchanged, both parties are committed to the sale, and it is only a matter of time before the keys to the property change hands.