Buying or selling a property is a complex legal process that involves several key stages. Two of the most critical milestones in conveyancing are the exchange of contracts and completion. These stages signify significant legal and financial commitments, yet many buyers and sellers may not fully understand the difference between them.
At Blackstone Solicitors, we provide expert legal guidance to clients across England and Wales, ensuring a smooth and efficient property transaction. This article will clarify the distinction between exchange and completion, explaining what each stage entails, why they are important, and what you need to do to prepare
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What Is Exchange of Contracts?
The exchange of contracts is a pivotal moment in the conveyancing process. It is the point at which the sale or purchase of a property becomes legally binding for both parties.
What Happens at Exchange of Contracts?
- Each party’s solicitor will prepare an identical contract detailing the terms of the sale.
- The buyer and seller sign their respective copies of the contract.
- The solicitors then exchange the signed contracts on behalf of their clients, usually over the phone or electronically.
- A completion date is agreed upon and written into the contract.
- The buyer typically pays a deposit, usually 5-10% of the property’s purchase price, which is held by the seller’s solicitor.
Once the exchange of contracts has taken place, neither party can withdraw from the transaction without incurring serious legal and financial consequences. If the buyer pulls out, they will lose their deposit, and if the seller withdraws, they may be sued for breach of contract.
What Needs to Be in Place Before Exchange?
Before exchange, several key steps must be completed:
- Mortgage offer received: If the buyer is obtaining a mortgage, their lender must have issued a formal mortgage offer.
- Property searches completed: Essential searches, such as local authority, environmental, and water and drainage searches, must be reviewed.
- Survey and inspections done: Any structural surveys or inspections should be carried out and any concerns addressed.
- Funds available for deposit: The buyer must have the necessary deposit funds ready for transfer.
- Signed contracts: Both parties must have reviewed and signed their contracts.
- Completion date agreed: The buyer and seller must agree on a suitable completion date, which is typically one to four weeks after exchange.
What Is Completion?
Completion is the final step in the conveyancing process, where legal ownership of the property is officially transferred from the seller to the buyer. It is the moment when the buyer can collect the keys and move into the property.
What Happens on Completion Day?
- The buyer’s solicitor transfers the remaining balance of the purchase price to the seller’s solicitor.
- The seller’s solicitor confirms receipt of the funds and authorises the release of keys (usually via the estate agent).
- The buyer’s solicitor registers the new ownership with HM Land Registry.
- The seller vacates the property if they have not already done so.
- Any outstanding mortgage on the property is repaid from the sale proceeds.
Once the funds have been transferred and confirmed, completion is legally finalised, and the buyer takes full possession of the property.
Key Differences Between Exchange and Completion
| Aspect | Exchange of Contracts | Completion |
| Legal Status | Legally binding commitment | Legal transfer of ownership |
| Deposit | Paid at exchange (5-10%) | Full payment completed |
| Risk | Buyer becomes responsible for the property | Ownership officially changes hands |
| Time Gap | Usually 1-4 weeks between exchange and completion | Happens on an agreed date |
| Withdrawal Consequences | Loss of deposit or legal action | N/A – transaction is final |
What Happens Between Exchange and Completion?
Although the transaction is legally binding after exchange, there are still some final steps to be completed before the actual handover of the property:
- The buyer arranges buildings insurance, as they become responsible for the property from exchange.
- The buyer’s solicitor carries out final pre-completion searches to ensure there are no last-minute issues.
- The seller ensures the property is vacant and in the agreed condition.
- Both parties confirm final moving arrangements such as removals and utilities transfer.
Can Exchange and Completion Happen on the Same Day?
In some cases, particularly with cash buyers or straightforward transactions, exchange and completion can take place on the same day. However, most transactions have a gap between these two stages to allow both parties time to finalise preparations.
What If There Are Delays Between Exchange and Completion?
Occasionally, delays can occur between exchange and completion due to factors such as:
- Issues with mortgage funds being released
- Problems with the seller’s onward purchase
- Unexpected legal or financial complications
If completion is delayed beyond the agreed date, the party causing the delay may face financial penalties, such as daily interest charges.
Conclusion
Understanding the difference between exchange and completion is essential for anyone buying or selling a property. Exchange of contracts is the legal commitment to the transaction, while completion is when ownership officially changes hands.
At Blackstone Solicitors, we ensure our clients are fully informed and supported throughout every stage of the conveyancing process. Whether you are a first-time buyer or an experienced investor, our expert legal team is here to guide you smoothly from exchange to completion. If you need professional assistance with your property transaction, contact us today.
How we can help
We have a proven track-record of helping clients purchase a new home. We are a multidisciplinary firm and have all the expertise inhouse to satisfy the most exacting requirements of our clients. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact Our Residential Property Solicitors
It is important for you to be well informed about the issues and possible implications of buying a residential property. However, expert legal support is crucial in terms of ensuring a positive outcome to your purchase.
To speak to a member of our New Enquiries Team today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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