12 November, 2015
When buying a house, exchange - exchange of contracts - is the penultimate big step in the house moving process. While some people choose to exchange and complete on the same day, many solicitors prefer to have a minimum of one week between the two. That's not the longest it can go on, though, as the process has been known to take 28 days or more.
Exchanging on the same day is sometimes unavoidable when it comes to complicated chains, and can certainly help speed up the buying process. It does come with a risk attached though, as well as extra fees, depending on individual solicitors.
Preparing for the contracts
The contracts from the seller will reach you via your solicitors; prepare for a pretty hefty bundle of papers! There is no part of the house-buying process that is particularly tree-friendly.
Before you exchange the contracts you should make sure that you have everything in place to proceed. You should have agreed on an offer, including what the price includes such as the fixtures and fittings. All surveys should have been undertaken and any queries answered by the seller's solicitors. It is also important that you arrange for buildings cover for the new property - this must take effect from the date of exchange. Even if you do not complete and get the keys until a later date you will be liable, so must be insured.
What should you look out for in contracts?
Be sure to read through the contracts carefully. Look out for restricted covenants or anything that will impact your life in this new home. It is important to be certain that you are satisfied, so request any further information you need from the seller's solicitor that could impact you or the sale. Pulling out before signing the contracts will lose you some fees but it is important to do so at this stage rather than later.
Paying the deposit
Upon returning the contract to the solicitors you will be required to pay the deposit, a process that's handled by your solicitors. You should make sure before the exchange date that you have the funds available, ready for transfer. Your solicitor may have a preferred manner of doing this, but the generally accepted way is a CHAPS payment which you can do through your bank. There may be a fee for this service but it means your money is securely transferred to your solicitor, to be held safely until the completion.
If you decide to pull out of the purchase after the exchange of contracts then you will lose the deposit. You could also be sued by the buyer. The exchange of contracts signifies a legally binding contract and it is very difficult for a buyer to back out once the documents have been signed.
However, legalities aside, exchange of contracts is a very exciting part of the house-buying process as it means the end is in sight and you are one step closer to owning your new home.