The Conveyancing Process - Exchange of Contracts
The buyer’s solicitor has completed their investigation of the property. The buyer and seller can now proceed to exchange of contracts. What are the steps to achieve this?
1. Contract
Your solicitor will ask you to sign the contract. The contract does not become binding until solicitors have exchanged contracts on your behalf.
2. Deposit
If you are buying a property, your solicitor is required by law to investigate the origin of your funds. If you are using the proceeds of a related sale, this is straightforward. In any other scenario, your solicitor will ask for evidence of the origin of the funds you are using for your purchase. Once you have provided this information, your solicitor will ask you to pay the deposit.
The standard deposit, payable on exchange of contracts, is 10% of the purchase price. This is not to be confused with the estate agency use of the term “deposit”, which generally refers to any amount of money not coming from a mortgage lender or a related sale. If a buyer offers less than 10%, the seller’s solicitor will check with the seller that this is acceptable.
3. Exchange
When each solicitor is holding a contract signed by their clients and the buyer’s solicitor is also holding the agreed amount of the deposit, the parties are ready to exchange. This is done in a telephone conversation. The solicitors agree on the terms of the contract, including the completion date, and record the date and time of the exchange. At that moment, the contract to buy and sell a property for an agreed price on an agreed date becomes binding.
The solicitors then exchange the physical signed contracts by posting them to each other. The buyer’s solicitor will also arrange to pay the deposit to the seller’s solicitor unless the parties have agreed that the buyer’s solicitor may hold it until completion. This is quite usual, particularly in residential sales where there are 2 weeks or less between exchange and completion.
The Conveyancing team at MJP Law exchange contracts in many matters every week. For information or an estimate of fees, please contact conveyancingteam@mjplaw.co.uk.
