Exchange and complete on the same day...what are the implications?

SuzySu

Hi

As the title suggests, it has been put to us by our solicitor that we exchange and complete simultaneously, due to fluctuating mortgage and second charge rates.

Can anyone advise me whether there are any drawbacks to this. Is it unusual to be doing this? I need to reply to his letter.

Thanks

chickmug

The major drawback is it is very very stressful. Making plans to move, packing , arranging removals, etc and not knowing if the other party could pull out at the last minute. I see it quite often and not to be recommended and always best to have a gap between exchange and completion.

Lakey

In the old days, when peoples word was usually their bond, we would regulaly exchange and complete on the same day.
I agree with chickmug, its best to have a lapse now particulaly if you are going to rent.

SuzySu

Sorry....I have not sold a house before. Why do you recommend a gap between exchange and completion? Isn't an exchange of contracts legally binding? Why would the solicitor advise it then if it is risky?

sealady

We were in the position about 6 weeks ago and in the end the deal fell through because of the mortgage provider changed the criteria and that happened 2 days before the completition. If at all possible try and have a delay between that way you know that once the contracts have been signed no one can change their mind. I wish we had listening to our own advice at the time.

SuzySu

Oh no....how awful. Gosh, I am really concerned now. We need this sale desparately as we are not meeting our mortgage repayments any more. Is there anything I can be doing to find out how things are going. We don't hear much from one week to the next. Is no news good news?

tbs624

Agree can be stressful but we've e'd & c'd on the same day and it went ahead smoothly (smallish chain though)

silvercar

SuzySu wrote: »

Sorry....I have not sold a house before. Why do you recommend a gap between exchange and completion? Isn't an exchange of contracts legally binding? Why would the solicitor advise it then if it is risky?

If someone has not got a deposit, it is often safer to exchange and complete on the same day as they have not put up any money on exchange, so you would have problems getting any compensation if they failed to complete.

Solicitors advise it as a non risky option, as no-one is obliged to complete until they have exchanged, so there is no breach of contract if they haven't exchanged. Just means you are biting nails until the actual day.

I also think you are at risk of a buyer dropping the price 10 minutes before exchange (& completion). With no contract already signed you have to take it or leave it, in a desparate situation you are forced to take the lower price.

benb76

did it myself 2 years ago, no problems or stress at all.

Richard_Webster

If someone has not got a deposit, it is often safer to exchange and complete on the same day as they have not put up any money on exchange, so you would have problems getting any compensation if they failed to complete.

Solicitors advise it as a non risky option, as no-one is obliged to complete until they have exchanged, so there is no breach of contract if they haven't exchanged. Just means you are biting nails until the actual day.

I also think you are at risk of a buyer dropping the price 10 minutes before exchange (& completion). With no contract already signed you have to take it or leave it, in a desparate situation you are forced to take the lower price.

I agree with this. There are two reasons for doing this. First is as suggested, that buyer has no deposit. If you are also buying then it is risky for you to agree to exchange with no deposit or a very small one, because your buyer may drop you in it and whilst you can in theory sue each other, your seller is in a stronger position than you are if you are selling to an FTB - FTB can disappear whereas you have house on which your seller can fix charging order!

The second type of situation is to do with actually drawing down the money, even though the exchange deposit being offered may be acceptable. Lenders require 5-7 working days for this in their blurb, but the better ones can perform more quickly most of the time if you ask them nicely. Some of the less well known ones are notoriously unreliable and are famous for coming up with random excuses for why the funds cannot be sent. So you can set a proposed date for completion and the solicitors can work towards this but won't actually exchange until the last buyer's solicitor is happy that he will get the funds from his client's lender. Sometimes this might not happen until the day itself. However this pressure usually occurs in situations where a date has been decided on by chain and it is difficult to alter it. If everyone is more relaxed and a buyer has a funny lender then the answer is to exchange with a date say 14 days away to give plenty of time for the money to come through.

This point about drawing down the funds is only relevant once the mortgage offer has been received and any critical conditions in it have been met. Normally it is daft to try setting completion dates until that has happened and all the searches and enquiries have been completed satisfactorily. So I have to say I don't totally understand what OP's solicitor is saying about mortgage rates changing - I don't see how that applies - nobody would try to complete until they had a clear offer and everything else was sorted and it would be silly trying to set dates beforehand because nobody might know how long it would take to sort out any outstanding issues.

dander

Just seconding silvercars last comment. I would have thought exchange and completion in this current climate particularly, leaves you at major risk of the buyer doing the dirty. Especially if they KNOW you're desperate to sell. If they suddenly drop the price 10 or 20k on the day and you're already loading furniture onto a van, you don't really have any option to say no, and they'll know that.

And on your point about not hearing anything - call, call, call. The more you chase your solicitor the faster things will happen. If you sit around waiting for solicitors to call you, you'll move further and further down their to do file.