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  • Step 3a - Buy the Property: Exchange of Contracts

    3rd October 2017

     

    During exchange of contracts the transaction becomes legally binding. Contracts are read out in a recorded phone call to confirm that each party has an identical contract stating the completion date, any fixtures and fittings included and the agreed sale price. These are then signed and posted to the other party (exchanged) along with the buyer paying a deposit (usually 10%).

     

    At this stage you can breathe – it’s now far more unlikely that the sale will fall through! Make sure you have buildings insurance in place at this stage because if anything happens to the property, you are legally responsible!

     

    If you have chosen to complete on the same day as exchanging contracts then you will need to have organised removals, home insurance and mortgage funds in advance. If you are completing after exchange (which happens in most cases) you have some additional time to organise removals and the transfer of mortgage funds. Most mortgage companies require at least 5 working days between the two stages to arrange mortgage funds.

     

    One of the biggest reasons to keep the two dates separate is to prevent game playing such as gazundering, gazanging or gazumping. This happens when one party decides to renegotiate knowing that the offer isn’t yet legally binding and the other party stands to lose money on removals bookings, completion delay fines and other checks. Because of this they are aware that the other party is likely to give in and change their offer to ensure completion goes ahead.

     

    Find out about completion or go back to the conveyancing process.

    Progress: 77% complete