Exchange of contracts - what exactly happens?

Pinto2013

Know this sounds pretty ignorant but in my late 60s and haven't bought or sold for far too many decades to mention.

I may decide to pull out of sale which is going very, very, very slowly and this is causing me problems.

I am sorry if there is an answer elsewhere on the site - I had a look but couldn't find anything.

Does exchange actually mean physically exchanging documents?

Do the buyer and seller have to positively do something? S is signing something? Or can the solicitors just breeze ahead (though mine isn't moving very fast at the moment).

It would be a great help to know the actual actions and how they happen as this will aid me a great deal.

Thanks

bris

Once contracts are exchanged there is no going back without severe penalties on who ever pulls out.

Contracts are exchanged by solicitors but only when things are iron clad and in place. Speak to your solicitor now if you are worried about something, the whole process is slow, things will be happening but in the legal and banking world they don't happen quickly.

BlaEm

I've just sold and this is what I believe happened:

Seller's solicitor drew up a contract - one copy sent to seller (me) to sign but not date, another copy sent to buyer's solicitors for them to sign, but not date.

Once the date of exchange has been agreed, both solicitors call each other up, agree the exchange and then date each of the contracts (and confirm with their clients that exchange has taken place).

A (usually 10%) deposit is required from the buyer before this physical exchange will happen. If you are selling as well, your solicitor will normally effect as one transaction i.e. use your buyer's deposit as your deposit.

So, before you can exchange as a seller you will have only needed to sign a contract on your sale and obviously ensured your solicitor has answered any of your buyers queries.
As a buyer, you will need to have signed the contract and made the deposit available.

Ask your solicitor to follow up with the other party on what is delaying exchange; Estate Agents can often be quite good at nagging, too!

Thrugelmir

Pinto2013 wrote: »

I may decide to pull out of sale which is going very, very, very slowly and this is causing me problems.

Nothing new. House transactions can be painfully slow. All sorts of issues come to light that require ironing out.

PasturesNew

You say it's going slowly, 3 months is typical, 4-5 months is not unheard of. You have to remember though: if you pull out you have to start entirely from scratch again.

Pinto2013

PasturesNew wrote: »

You say it's going slowly, 3 months is typical, 4-5 months is not unheard of. You have to remember though: if you pull out you have to start entirely from scratch again.

I am beginning to realise that. I accepted this offer as it was a cash sale, no chain etc hoping it wouldn't be too slow; then the buyer said he needed a mortgage after all! So everything slowed down.

He still hasn't had the valuation done (nearly six weeks after offer). I had equally good offers it is just that he showed proof of dosh first!

Hmm starting from scratch would be a nightmare. I'll be patient for a bit.

G_M

As Blaem says, assuming you are using a solicitor (some people DIY), Exchange will happen by phonecall between the solicitors.

Following this, they will date the (pre-signed) contracts and post them to each other.

Pinto2013

G_M wrote: »

As Blaem says, assuming you are using a solicitor (some people DIY), Exchange will happen by phonecall between the solicitors.

Following this, they will date the (pre-signed) contracts and post them to each other.

Very useful to know that once I have signed that the solicitor could, essentially, just go ahead and exchange without consulting me again.

That may not suit.

Perhaps I should instruct the solicitor to ask me for explicit permission to cary out the exchange of contracts?

Does that exchange include a contractual obligation re receipt of deposit and completion?

Solsol

This is exactly what has happened to me - we accepted an offer based on the fact that they were cash buyers and they are now getting a mortgage - same for their buyers too.

It has slowed things down but we had been moving fairly speedily up until this point so I'm not too worried just yet. I have faith that we will exchange and complete before the end of the year which is when our mortgage offer expires but my main concern is that our vendor will get impatient and we'll lose the house :-(

G_M

Pinto2013 wrote: »

Very useful to know that once I have signed that the solicitor could, essentially, just go ahead and exchange without consulting me again.

That may not suit.

Perhaps I should instruct the solicitor to ask me for explicit permission to cary out the exchange of contracts?

Does that exchange include a contractual obligation re receipt of deposit and completion?

OK - let me clarify further.

No, your solicitor will act on your instructions.

He will ask you to sign the contract in advance, for convenience, and hold it 'to your instructions'.

You can ask him to delay, or cancel, the contract at any time. He will, in any event, give you advance warning of the impending Exchange, usually by phone but maybe in a letter, and seek confirmation that you wish to proceed.

He will also ask for your preferred Completion date (which like the Exchange date you will have left blank on the contract). He will then negotiate with the other side (and all others in the chain) to agree a Completion date, and only when everyone is ready, and both Exchange and Completion dates have been agreed by all parties, including you, will he make the 'Telephone Exchange', insert the dates, and post them off.

The alternative would be to negotiate both the dates, and then get all the clients in to sign the contracts and insert the dates - which could take days or even a week, during which time any one of them might change their mind and not sign, leaving the others in the chain commited!

Pinto2013

Solsol wrote: »

This is exactly what has happened to me - we accepted an offer based on the fact that they were cash buyers and they are now getting a mortgage - same for their buyers too.

It has slowed things down but we had been moving fairly speedily up until this point so I'm not too worried just yet. I have faith that we will exchange and complete before the end of the year which is when our mortgage offer expires but my main concern is that our vendor will get impatient and we'll lose the house :-(

It does help to know I am not alone! Hope it all goes well for you.