The aim of all parties to conveyancing transactions is to complete matters so that you can move into your new property and out of your old property.
At Askews Legal we appreciate that you want this to happen as quickly as possible and without delay. However, before completion can take place, we need to exchange contracts. The aim of this article is to explain to you the difference between Exchange of Contracts and Completion. Many clients don’t always understand what the difference is, so hopefully this article will demystify that for you.
Exchange of Contracts
This, as the name suggests, is where contracts are literally exchanged between the solicitors for each party. Traditionally this involved the solicitors physically meeting and handing over the contract to the other party and at the point of the handover contracts were “exchanged”. Nowadays it is much more common that solicitors exchange contracts over the phone by telephone exchange.
Telephone Exchange involves both solicitors going through the contract simultaneously and agreeing upon the contents of the contract each solicitor holds. Once we are satisfied that we hold identical counterpart contracts we will agree that contracts can be exchanged. We will then date the contract with the exchange date and complete the section for the completion date. We will also agree upon the amount of deposit held by the seller’s solicitor and this will usually be held to order pending completion. We will also specify the time of exchange so that there can be no dispute as to when exchange took place.
Once contracts have been exchanged, they become legally binding. This effectively means that all parties are now “locked in” to the transaction and if either party pulls out or fails to fulfil their obligations under the contract then that party will be in breach of contract which can have severe consequences and involve financial penalties!
If you are purchasing a property you will become liable for any risk to the property between exchange and completion from the point of exchange. Before we exchange, we will ask that you put appropriate buildings insurance in place prior to contracts being exchanged to protect you in the unlikely event that anything happens to the property before completion takes place. If something were to happen to the property after we have exchanged contracts and you don’t have buildings insurance in place you will have no protection for the damage caused and you as the purchaser will be personally responsible for any necessary repairs, not the seller.
We try to exchange contracts a few days or a sometimes a week before the agreed completion date, this allows parties time to arrange removals in readiness for completion (moving day) but it is not at all uncommon to exchange contracts on the day before completion or even on the day of completion itself. The latter is called a simultaneous exchange and completion.
Completion, or moving day is when the whole transaction is finalised. The purchasers of a property will become the legal owners of that property and the sellers will no longer have any legal rights over that property.
At Askews Legal we understand that you want to move as early as possible in the day to allow yourself plenty of time to move all of your belongings. However, we cannot guarantee a set time for completion. We aim to be able to complete by midday but this is not always the case.
Completion day is when all of the monies involved in a transaction are moved around. If you are purchasing with the aid of a mortgage, we will need to have received mortgage funds from your lender, we will then need to transfer the whole of the purchase monies to the seller’s solicitor and wait for their confirmation that they have received funds.
If you are selling and have a mortgage to redeem, we will need to wait until we receive your sale monies in from the purchaser’s solicitor before we can send funds to your lender to redeem the mortgage. Once we have redeemed the mortgage, we will be able to transfer any balance of funds back to you and confirm completion, or if you are also purchasing, we will then transfer your purchase monies to the solicitors for the seller of your new property.
Once we receive confirmation that monies have been received by the relevant parties, we will notify the other party that completion has taken place. The seller’s solicitor will contact the Estate Agent and allow them to release the keys to the buyer. You, as the buyer will then be able to collect the keys to your new property and move in.
At Askews Legal we aim to proceed to exchange and completion as quickly and smoothly as possible for you to make the process as stress-free as possible. We will keep you fully updated throughout your transaction and indeed on the dates of exchange and completion.
Askews Legal LLP are a firm of Solicitors based in Coventry who deal with various residential conveyancing transactions. If you are thinking of selling or buying a property, please contact our experienced Residential Conveyancing Team at Askews Legal LLP.