Exchanging?

mcdelarich

What does exchanging mean? As in terms of law - is it legally binding? What happens if vendor changes his/her mind once we have exhanged - what would happen to our deposit?

Our vendor is wanting to exchange before he goes on holiday but complete the day he gets back - opinions please? By the way - we're not in a chain.

mcdelarich

Answers anyone??

Jorgan_2

When you exchange contracts it is legally binding. If they change their mind after this time, you sue them for the deposit monies plus other costs. Its very rare for this too happen, I've had it four times in 16 years as an EA.

I'm guessing your vendor wants to go away on holiday safe in the knowledge that everything is sorted.

Richard_Webster

Jorgan wrote: »

When you exchange contracts it is legally binding. If they change their mind after this time, you sue them for the deposit monies plus other costs. Its very rare for this too happen, I've had it four times in 16 years as an EA.

I'm guessing your vendor wants to go away on holiday safe in the knowledge that everything is sorted.

I agree. When exchange takes place buyer' solicitor gives undertaking (binding on him) to send the deposit to the seller's solcitors. The seller's solicitor either has to hold it as what is called stakeholder (so he is bound to return it if his client doesn't complete and the buyer serves a notice requiring his deposit back) or pass it onto to another solicitor on the seller's purchase and eventually to the top of a chain where the solicitor at the top holds it on that same basis.

Johnhowell

Jorgan wrote: »

When you exchange contracts it is legally binding. If they change their mind after this time, you sue them for the deposit monies plus other costs. Its very rare for this too happen, I've had it four times in 16 years as an EA.

I'm guessing your vendor wants to go away on holiday safe in the knowledge that everything is sorted.

And how many Exchanges and Completions on the same day in 16 years?

My buyers' buyer has requested this.

Regards,
John

Richard_Webster

A lot more than 4! They are fairly common as people with 100% mortgages have deposits to put down at exchange.

The risk of exchanging with a nil or tiny deposit is actually greater for the people in the middle of the chain and a worst for the person selling to the FTB with the 100% mortgage.

If everything goes pear shaped and FTB exchanges and then changes his mind and disappears (I haven't actually know this to happen, but it could) following the contractual date for completion the people up the chain serve "Notices to Complete" on their immediate buyers and so on down the chain. They can then sue for the 10% deposit that should have been paid. Apart from the FTB they all have properties so their seller can eventually register a charging order against their buyer's proeprty. FTB hasn't got a property and has gone so his seller is stuck!

Therefore if I'm acting for an FTB I will offer a choice to the sellers but they will probably want to exchange and complete on the same day unless they think that certainty is more important.

If I am acting for someone who is selling to a FTB with no deposit, I'm much less happy to advise them to exchange beforehand with no deposit or a tiny one for the reasons explained.

People also need to realise that mortgage advance money needs to be arranged and this has to be ordered with the buyer client understanding that there could be extra costs etc if the transaction doesn't go through and the lender requires the money sent back. Notice of about a week is still needed to get the money so you can't just tell everyone that you want completion tomorrow because someone has told you exchange and completion on the same day can be done. It can, but only if the solcitors etc concerned have organised a week or so beforehand for it to happen!

Jorgan_2

Its fairly common to complete & exchange on the same day. Last one we had was last Friday, the buyers solicitor decided to raise an enquiry at 11.30, not a popular thing to do, finally sorted and completion took place at 3.30.