As a professional, I would like to present an informative article on the topic of “How does exchange of contracts take place?”.
Buying or selling a house is a complex process that involves a great deal of paperwork, legalities, and processes that must be completed prior to the exchange of contracts. One of the most crucial aspects of the home buying or selling process is the exchange of contracts. This is the point where both parties become legally bound to the sale or purchase of a property and the transaction can no longer be reversed.
So, how exactly does the exchange of contracts take place? Let`s dive into the details.
What is the exchange of contracts?
The exchange of contracts is a legal process where both the seller and buyer of a property sign identical copies of a contract and the solicitors of both parties exchange them. This process takes place after all the necessary checks and paperwork have been completed and both parties are ready to proceed.
At this point, both parties will have agreed on a completion date where the sale will be finalised, and ownership of the property will transfer from the seller to the buyer.
The exchange of contracts can be a tense and nerve-wracking process for both parties. However, it is important to understand that once the contracts have been exchanged, both the seller and buyer are legally bound to the sale or purchase of the property.
What happens during the exchange of contracts?
During the exchange of contracts, the solicitors of both parties will typically carry out the following steps:
1. Review the contracts – The solicitors will review the contracts to ensure that they are identical and accurate. Any discrepancies will need to be resolved before the exchange can proceed.
2. Sign the contracts – Once the contracts have been reviewed and approved, both parties will sign them in the presence of witnesses.
3. Exchange the contracts – The solicitors will exchange the contracts over the phone and confirm the completion date.
4. Pay the deposit – The buyer will usually be required to pay a deposit at the point of exchange, which can be up to 10% of the purchase price.
Once the exchange of contracts has taken place, both parties are legally bound to the sale or purchase of the property. The buyer must ensure that they have adequate funds in place for the completion date and the seller must vacate the property by the agreed-upon completion date.
In conclusion, the exchange of contracts is a crucial step in the home buying or selling process. It is important to understand the legal implications of this process and ensure that all the necessary paperwork and checks have been completed before proceeding. With the help of experienced solicitors and a thorough understanding of the process, the exchange of contracts can be a smooth and stress-free process.
