Read Springbok Properties advice about exchanging contracts
Although it’s a normal part of the conveyancing process, the exchange of contracts is a big deal for property sellers. That’s because it’s the “point of no return”.
Once the contracts are exchanged and signed, anyone pulling out of the property deal is financially liable and will lose money. It is therefore the most important moment, when both the buyer and seller really agree to the sale and legal ownership is all but guaranteed to change hands.
Before you sign
Your solicitor will have worked on all the legal documents and responded to all the buyer’s questions and concerns. Before they ask you to sign the finalised contracts, they will check that:
- All enquiries have been returned and answered to the solicitor’s and your satisfaction.
- A completion date has been agreed.
For your part, you should make sure you have no misgivings and are ready to commit to the sale:
- The contract terms have been hashed out and agreed.
- You understand everything in the contract.
- The completion date is correct and appropriate.
You should also make sure that there’s no new damage to the building and that all the fixtures and fittings are present and accounted for. The buyer is likely to want to visit and double-check this for themselves.
Assuming you’re happy with everything, you sign the contract.
Exchange of contracts
The exchange of contracts looks odd to normal people. It usually consists of your and the buyer’s solicitors reading out their signed contracts over the phone (and being recorded doing it) to make sure they’re the same. They then send the documents to each other.
If you’re in a chain, the same thing happens but the contracts are not sent until everyone in the chain is happy to proceed. This is why property chains are so annoying: if a single person delays, everyone gets delayed.
As soon as the signed contracts are exchanged, everyone is committed to the deal. If the buyer pulls out, they lose their deposit. If you pull out, you risk serious legal implications: the buyer can force you to sell or sue to reclaim their deposit (and get compensation). After exchange, you are tied to the contract – you cannot accept another offer, even if it’s higher.
Springbok Tip: we make sure all our buyers have their finances in place at the start because it makes the process so much smoother. They are much less likely to pull out if they’ve already jumped through hoops to get a mortgage agreement in principle, and there are far fewer chain delays as well.
You now have a date for completion, so you can start to organise your move, if you need to. Bear in mind that there can still be problems, so make sure you get dates pencilled in, rather than confirmed.
All that remains is for the sale to complete!