Completion and Exchange, Difference??

leftatthelights

Hi guys,

As the title says, can anyone explain the difference between "completion" and "exchange of contracts"??

I thought it was the same thing but after a very confusing conversation with our solicitor today, im now not so sure.

Mrs_pbradley936

When you exchange you are committed to buying the place but have only handed over the deposit. Upon completion the place is yours and has been paid for usually via a mortgage. Most people have a month between the two dates because they need to arrange for a furniture van, have time off work etc. but it can be a lot less.

whitesatin

Exchange of contracts means that you are entering into a legal agreement and liable to have to (at least) meet the expenses of others should you pull out after that. Completion is the date you all agree upon when the move usually takes place, it has to be agreed upon at the exchange stage. The transfer of money takes place, usually on completion day. This is a simplified version of how I see things anyway.

Jowo_2

“Exchange” means the exchange of contracts. ...on exchange there is a legally binding contract between seller and buyer for the sale and purchase of a property.
Both the buyer and the seller sign the contract. You also agree a completion date that suits both of you.

At this stage the buyer also has to pay a deposit to the seller (nothing to do with the deposit required by a lender, btw) ... .The deposit the buyer pays to the seller is typically around 10% of the value of the property but there is room for negotiation to, say, 5% if the buyer is a first-time buyer.

Until the exchange of contracts, the two parties are totally free to change their minds and to pull out of the deal -- but the moment contracts have been exchanged and the buyer has handed over the deposit, both sides are legally required to proceed. If the buyer doesn't proceed, they risk being sued for breach of contract and they could lose your deposit.

One of the terms of the contract will be the completion date. This is the date on which title to the property is transferred by the seller to the buyer and the buyer takes possession of the property.

There is inevitably a period between exchange and completion and this period can vary from a few seconds if exchanged and completion take place on the same day or several months, even years. In current practice the usual period is between 5 and 20 working days.

Between exchange and completion
Your solicitor and the seller's solicitor will conduct the remaining legwork needed to complete the deal. Typically this will take about two weeks. You'll be asked to sign a few more documents and there'll be a bit of double-checking of the deeds and files. Your solicitor will tell you how much additional money you need to pay (if any) and collect the value of your loan from your mortgage provider.

Completion

Once this happens, the solicitor will let the buyer know when to collect the keys and they are free to move in.

leftatthelights

Thanks guys for the very quick replies!!

Our solicitors are absolutely useless and have been dragging their heels from day 1!

Its like an uphill battle all the way!!

Anyway, thanks again for the information!!!:D:j

leftatthelights

Thanks Jowo for the very in depth explanation!!

Excellent advice!!:T:T

Jowo_2

It was amalgamated from a couple of threads I found on Google, not my own words. I've had to mug up on this stuff recently and before I did, I always assumed completion was the significant step (it is) but in fact, the exchange is the biggie because that means the buyer is committed to going through and will face big penalties if they don't.

AlastairM_2

One thing to note: although you don't own the property until completion, you are committed at exchange. You should therefore normally insure the property from exchange as you're still committed to purchasing the property even if it burns down between exchange and completion.

leftatthelights

The problem I have is that we were meant to be actually moving in next friday (17th). We have always said this date from the beginning and now it turns out that our solicitor thought we meant exchange on the 17th NOT complete!!!

Thats why I asked the question.

I am now very doubtful that we have any chance of completing on the 17th but everything has been arranged for that date and we have even handed our notice in at the flat we currently rent (we have to be out by the 21st)!!

All very worrying!!

Just as a side note, the mortgage and all paperwork has been signed etc so we are basically waiting for the solicitors to do their thing but they have NEVER rang us, its always been us chasing them all the time!!!:mad:

timmyt

leftatthelights wrote: »

Thanks guys for the very quick replies!!

Our solicitors are absolutely useless and have been dragging their heels from day 1!

Its like an uphill battle all the way!!

Anyway, thanks again for the information!!!:D:j

you wont actually have a 'solicitor' acting for you if there has been delay. .

roobyroo07

It is possbile to exchange and complete on the same day, so not all is lost!

Get onto your solicitor - hound them in fact! And tell them you MUST exchange and complete on your agreed date.