The last stage of the legal stuff, exchanging contracts takes you even nearer being the legal owner of your property. But you’re still not quite there yet.

Following exchange, the deal is now legally binding and expensive deposits will be lost if you pull out, and penalties paid by the seller if they change their mind. Things going wrong at this stage are rare and you are very, very close to popping that champagne cork.

The contracts

Both you and the seller will sign identical contracts to complete the property purchase. These are what will be ‘exchanged’ between both your legal teams. This usually happens between 7 and 28 days before completion.

What to have boxed off before exchange

That’s why your conveyancer should have made sure everything is checked, in place and good to go before exchange. The hotlist of things to cover includes:

  • Agreeing on an offer
  • Which fixtures and fittings are included
  • Mortgage valuation and surveys
  • Formal mortgage offer (in writing)
  • Mortgage deposit
  • Searches
  • Building insurance
  • A date of completion for the sale
  • That you have read, understood and signed the contract

The exchange

Once your conveyancer has ensured all these things are done, you will agree on a date and time to exchange contracts – usually at midday on the chosen day. Your solicitor or conveyancer will exchange contracts for you which usually involved them reading out the contracts over the phone to make sure the contracts are identical, then exchanging signed hard copies in the post.

Same day exchange and complete

If you want to get things done fast and aren’t a fan of waiting around for things to happen – or paying a contract deposit – you can always liven up proceedings by exchanging and completing on the same day. This is becoming more and more common and worth considering, particularly if you are not subject to the unexpected events that can happen when you’re in a chain. It’s also the preferred way to do things for cash buyers.

Even though many mortgage lenders will let you exchange and complete on the same day, others require five working days or more between. If you go for same day, you should make sure your lender transfers the funds to your solicitor the day before to help things run smoothly.

Same day exchange and completion is not for the fainthearted as your moving day could theoretically change at the last minute. Okay if you only have a few boxes but a major hassle if you’ve packed up the contents of an entire house and get a call to say the move has been postponed.

In a chain?

If you are in a chain, your conveyancer will only release the contract if all the other people in the chain are clear to go ahead. This means if one person pulls out or delays, everything gets held up.

You could always consider breaking the chain to avoid jeopardising you house sale. This means you (or somebody else in the chain) moves out of their house into temporary accommodation until they can move into their new house. If breaking the chain using that method, most solicitors recommend exchanging contracts simultaneously on your sale and purchase to reduce risk.

After you exchange

Phew. Now’s the time to relax and look forward to actually moving into your new home. The good bit! The solicitors are on the verge of snapping their briefcases shut and all that’s left from a legal perspective now is completion which is when you legally take ownership of the property and collect the keys.

Insurance

After you exchange contracts, you are liable for the property, so you need to have buildings insurance in place. If disaster strikes, you will be legally responsible so make sure you have arranged it in plenty of time and aren’t feverishly searching online minutes before you exchange.

Things just got legally binding

Now you’ve exchanged, both you and the seller are protected by the law. You’re in a legally binding contract to buy the property and have a fixed date for moving.

To make sure the seller can relax, you will lose your deposit (or owe them more if the deposit was less than 10%) if you do not complete the purchase. And to help you sleep a little easier, they have to sell to you or you can sue them and they can no longer accept another offer.

Next steps

There are just a few of things left to do before you can start poring over paint charts and making your first visit to the local purveyor of DIY goodies. Your conveyancer will need to send a copy of the title deeds to your mortgage lender who will hold them until you pay your loan off. They will also lodge an interest in the property. This means the deeds are frozen for 30 working days so you can pay the seller and apply to the Land Registry to transfer them into your name.

Next step: Completion

Previous step: Conveyancing