Once all parties are agreed there will be ‘Exchange of Contracts’ meaning that both parties are legally bound to the sale.
In England and Wales, Exchange of Contracts is the last stage of the legal process after which you cannot pull out (without losing your deposit and any legal costs you may have incurred).
Between exchange and completion, you will be sent a statement showing the costs, the solicitor’s charges and the mortgage monies that are being repaid. If you are making an onward purchase at the same time, you may need to send a balancing payment.
The last thing to do is to sign the Transfer of deed which will transfer the ownership of the property on completion.
What happens when contracts are exchanged?
Once all the searches are complete and you’re ready to proceed with the purchase, you’ll be asked to pay a deposit which usually 10% (but sometimes 5%) of the property value before contracts can be exchanged. If the buyer pulls out after this stage, they will lose their deposit and may face legal action from the seller.
Both the buyer and seller will be required to sign copies of identical contracts in order for the sale to become legally binding and for these to then be sent, via recorded delivery, back to the solicitor or conveyancer.
It is essential to have Buildings Insurance cover in place at this stage and buyers should also consider other protection such as Life Insurance.
A date for completion is usually set for at least two weeks after contracts are exchanged, but it can be quicker than this.
Use the time between exchanging contracts and completion to plan your move, including packing your belongings and organising a removals company, if necessary.
On completion, your solicitor will receive the funds from the buyer and pay off any mortgages and other expenses and send the title deeds and signed transfer to your buyer’s solicitor.
At this point, the ownership will be transferred and you will need to have moved out and handed over the keys to the buyer, or new owner of the property.