What exactly is exchange and completion?

monty-doggy

I'm buying my first house.

Have received the offer, survey all done, paid solicitor for searches.

What exactly is the process now and how long will it take?

I understand you exchange then complete, but what does this mean?

lessonlearned

Exchange - this simply means that the contract to buy and the contract to sell are exchanged. The solicitors have to do this, no one else can because this is when the transaction becomes legal and binding. This is also when the purchaser pays the deposit which is lodged in a Client Acct at the solicitors.

The build up to exchange is when each solicitor works on behalf of the client to ensure that everything is ok. Pre-contract enquiries are sent out to each party, local searches, environmental searches etc are carried out, title deeds are checked out, a survey will be done and a mortgage will be applied for if required.

When all questions have been answered to everyone's satisfaction, corraborating evidence in the form of building regs, certificates etc has been supplied and checked, when searches and surveys have been completed and when a mortgage offer has been both made and formally accepted then, provided everything is in order, exchange can take place.

Legal Completion - basically this is when funds, both deposit and mortgage or balance, are transferred from the purchaser to the Vendor. Once all moneys are paid over and are sitting in the Vendor's bank then the Solicitor can authorise "Key Release". Job done.

Technically Exchange and Completion can take place on the same day but it is more common to allow a little breathing space between the two. This is usually done by negotiation to suit all parties.

monty-doggy

Thank you. Why then is there a delay between exchange and completion, and can I lose my deposit if the seller pulls out?

lessonlearned

monty-doggy wrote: »

Thank you. Why then is there a delay between exchange and completion, and can I lose my deposit if the seller pulls out?

Just added a bit to explain timescales.

Technically both parties can still back out after exchange. However there would be very heavy penalties. Forfeit of deposit plus reimbursement of costs.

This is why Exchange is deemed to be legal and binding. Pulling out after Exchange is extremely rare.



Once Exchange has taken place everyone tends to heave a big sigh of relief.

monty-doggy

Thanks, I understand now. I'm awaiting dates now. The searches are being done and mortgage offer has been received, I'm hoping I can ask to complete at the very end of June. I can't wait!

lessonlearned

Sorry just re-read your post.

If your seller were to pull out you would not lose your deposit.

monty-doggy

That's good to know, I almost thought twice about the size of my deposit!

lessonlearned

monty-doggy wrote: »

That's good to know, I almost thought twice about the size of my deposit!

Your vendor does not receive your deposit money until Legal Completion. It is held in what is known as a "Client Account" at the Solicitor's bank.

The only real risk is if the solicitor did a bunk with client funds.

Unfortunately it has been known to happen......:eek:

Fortunately it is extremely rare and you would have legal redress from the Law Solciety.

monty-doggy

Lol it's all feeling a bit risky!

This is the biggest thing we have ever done!

I'm so exited!

lessonlearned

monty-doggy wrote: »

Lol it's all feeling a bit risky!

This is the biggest thing we have ever done!

I'm so exited!

Yes I can see that.

Don't worry once you have exchanged you can crack open the bolly and celebrate.......

Good luck.

puregeordie

just a q about this,

from exchange to completion what happens to your mortgage balance? is this adjusted accordingly at completion as your still paying your mortgage until completion which could be a few months. So I take it whatever is left your obviously just pay that balance off.

So really I guess its better for the vendor as he doesn't need to rent for as long and he's paying off his mortgage a bit more.

I think, Cheers.