What happens between exchange and completion?

hollynololly

Hi quick question,

Im hoping to complete (Im the seller) on my house sale on 1st April. Ive tentatively booked removals and temporary accommodation for then ( Im moving abroad 2 weeks later) so dont really want to delay it.

Problem is , we stillhave not exchanged yet but it will hopefully be towards the end of next week or begining of the next - possibly leaving less than a week between exchange and completion.

Is this okay?

I dont really know what happens between the exchange date and the completion date - will I need to do anything myself other than start madly packing?

flora48

Just be aware that nothing is legally binding until exchange. Hope your removal company know it is a provisional date. I was in the same position last year, solicitors talking about an exchange date with completion a few days later, then the bombshell, the buyer at the bottom of the chain went to India for 6 weeks. Fortunately I had taken out a cancellation waiver with the removal company, the best £50 I spent as I had to cancel 10 mins before the close of business the day preceding my booked date thus saving myself 6 weeks storage charges.

hollynololly

Yes its all only booked provisionally - its a relocation package so it shouldnt actually cost me anything anyway.

What I really wanted to know is what work needs to be done between the exchange stage and the completion stage - by the solicitors/buyers/sellers etc - in terms of paperwork and legall and financial stuff - how many days would this normally take to do?

MegaMiniMouse

hollynololly wrote: »

Yes its all only booked provisionally - its a relocation package so it shouldnt actually cost me anything anyway.

What I really wanted to know is what work needs to be done between the exchange stage and the completion stage - by the solicitors/buyers/sellers etc - in terms of paperwork and legall and financial stuff - how many days would this normally take to do?

Historically, there are probably all sorts of reasons why it became conventional to have a delay between exchange and completion

But in practice, there is absolutely no point at all - the legal profession just likes to pretend, and preserve an air of mystery around what is actually a very simple process

Once you have exchanged contracts, then in theory the deal is as good as done - if the other party fails to complete, then you have to pursue them for damages

This will create extra income for the lawyers, and you may never be properly compensated

MMM

SmlSave

Once you've exchanged with a fixed completion date all the legal paperwork is practically done and just needs to be dated. The main thing the solicitor (and you) have to organise is having the funds in their bank the day before completion.

You can exchange and complete on the same day but generally there's a week or more between so that everyone can get packed and organised. That's all - no mystery

MegaMiniMouse

SmlSave wrote: »

Once you've exchanged with a fixed completion date all the legal paperwork is practically done and just needs to be dated. The main thing the solicitor (and you) have to organise is having the funds in their bank the day before completion.

You can exchange and complete on the same day but generally there's a week or more between so that everyone can get packed and organised. That's all - no mystery

Why not just complete, but agree a seven-day delay before moving?

Effectively, that's what happens anyway, so why have this two-stage process which allows the possibility for somebody in the chain to fail to complete?

MMM

sp1987

From a legal perspective of what is 'being done' by the solicitor...

If they are acting for the buyer's lender and the buyer, they repeat a bankruptcy search (K16) to check borrower is not bankrupt. It is a term of their instructions from the bank/BS.

They do an OS1 if a registered property to ensure they have a priority period during which to complete so as to minimise risk to the buyer/lender client. They basically check that what is on the register is what the buyer is buying and preserve their priority for it.

The mortgage advance comes through if applicable from the lender.

A few other bits too. Ensuring solicitor is in cleared funds to complete, preparing SDLT returns (often done early though), requisitions on title (a form where seller's solicitor for example promises to pay off any outstanding mortgages over the property on or before completion) etc.

Basically the pre-completion searches have to be done pre-completion.

The buyer may feel there is more going on there than the seller, who may be just waiting with their cardboard boxes if they are not a buyer in another transaction.

sonastin

MegaMiniMouse wrote: »

Why not just complete, but agree a seven-day delay before moving?

Effectively, that's what happens anyway, so why have this two-stage process which allows the possibility for somebody in the chain to fail to complete?

MMM

Because you are then living in someone else's house and that brings in all the implications of LL&T Law, squatters rights, etc etc. Best to agree a date to move out and contractually bind everyone to do that (exchange of contracts) and then transfer possession on moving day (completion) so that you don't find yourself owning property you don't live in and living in property you don't own.

MegaMiniMouse

sonastin wrote: »

Because you are then living in someone else's house and that brings in all the implications of LL&T Law, squatters rights, etc etc. Best to agree a date to move out and contractually bind everyone to do that (exchange of contracts) and then transfer possession on moving day (completion) so that you don't find yourself owning property you don't live in and living in property you don't own.

All those things can happen under the existing system, if somebody fails to move out (and it happens - a purchaser can arrive at his/her new address with all their possessions in tow, only to find that the previous owners are still there!)

Under a streamlined system, all members of the chain will already have paid for their new home, so why would they not want to move?

Who benefits from the existing 2-stage process?

MMM

sonastin

MegaMiniMouse wrote: »

All those things can happen under the existing system, if somebody fails to move out (and it happens - a purchaser can arrive at his/her new address with all their possessions in tow, only to find that the previous owners are still there!)

Under a streamlined system, all members of the chain will already have paid for their new home, so why would they not want to move?

Who benefits from the existing 2-stage process?

MMM

Under the current system, there is a clear demarcation - at completion the money changes hands and that is it, if you're not out of there you're trespassing. It strikes me as being a much greyer area in your proposal although, as it isn't fully specified, you might have an answer for all these things.

What I don't understand is what is gained by your proposal? You still have 2 stages "selling day" and "moving day" as opposed to exchange and completion but so what. People don't stay put because they still own their house, they stay put because they don't understand the system. Your proposal won't fix that. Or they stay put because packing has taken longer than they thought and they're not ready yet. I can see your idea actually making this worse - much more scope for "oh well dearie, what does another day matter? I'll be out of here soon enough. Tomorrow isn't any different to today".

You're asking for a whole raft of laws to be changed (LL&T and Property laws aren't designed around your idea) and I really don't understand what you hope to gain from it?

sp1987

MegaMiniMouse wrote: »

All those things can happen under the existing system, if somebody fails to move out (and it happens - a purchaser can arrive at his/her new address with all their possessions in tow, only to find that the previous owners are still there!)

Under a streamlined system, all members of the chain will already have paid for their new home, so why would they not want to move?

Who benefits from the existing 2-stage process?

MMM

Everyone. The banks want to ensure their money is being paid to somebody who is not bankrupt between exchange and completion. The bank needs time to transfer the mortgage monies to the solicitor. The buyer needs time to get the money for completion and SDLT to the solicitor and for it to clear.

The costs to do completion and exchange on the same day would make it hugely difficult in a big chain too.

If you have buyer A, B and C. Buyer A is a first time buyer, buyer B is selling to buyer A and buying from seller C. Seller C is a personal representative so isn't buying anything (just to make life easy so my chain is not 10 people long).

Exchange:

First phone call between solicitors of A and B. B needs to ensure that if B exchanges with C, that A will agree to exchange with him. Or B will be obliged to buy from C but with no money from the sale of the house to A. What basically happens is that A's solicitor promises that if B gets back to him by xpm on that day, A will exchange. This gives B the security to go up and exchange immediately with C knowing that they have an agreement which is binding to sell to A. They then go back to A and exchange before xpm. It is not so obvious on this small a chain but the whole chain's success is built on the promises given from the bottom of the chain all the way up. It is the final buyer and seller who exchange first, after all the previous calls. It seems pretty straightforward but can easily take up most of the useful day (remember when the banks close for transferring these deposits between parties?).

If you have a big chain, getting up and down to do all the exchanges before say 3pm is going to be a challenge in itself without then having to ensure everyone moves out in a regimented order and is out of the house, before you have even considered when the money is going to come in from the banks. What if one bank is late? Everything falls apart and half the people have to pay with money they do not have and the other half are stuck with boxes in their house not knowing what on earth is going on.

Getting groups of separate, unrelated individuals to do ANYTHING simultaneously is a burden. I'm sure you have tried getting out on a roundabout when it is your right of way and some dozy fool is parked across it so nobody can move at all. Imagine the added issues of these people trying to move their entire life somewhere else and how irritated and uncheery they quickly become. Some stop answering the phone and disappear, lol. Add this to the fact somebody may not want to move out due to it being a contested sale of ex partners, or someone may think they should stay in the house regardless of it being sold (mother in law) and you have a recipe for thousands of daily housing disasters.

Though, all the above becomes much less relevant if you are only buying and selling one property and the money is already there. This is why simultaneous exchange and completion can be done comercially much more readily. It is the sheer amount of people and the innate potential for human error on the side of everyone (even if you personally do everything right, whichever role you play as seller, buyer, solicitor, bank).

Also, nothing is binding until exchange with completion being set at exchange. Imagine another problem. We have this non-binding date for completion as 1st April, but the contract is not binding until exchange on 1st April. So you have all your removal men booked for 1st April. 9am 1st April exchange has not happened and either buyer/seller changes their mind. Everybody has paid out to move, nobody is bound, everybody (again possibly in a long chain so dozens of people with boxes everywhere and vans turning up) is staying put wherever they may be. You have nowhere to move to, someone may already have packed your life into a van. If you are in rented accomodation you may not even be able to stay where you are (although granted you will be at one end of the chain or another).

Chaos.