When you`re buying or selling a home, you`ll likely come across the term „contract exchange”. But what exactly does it mean?
In short, a contract exchange refers to the moment when the buyer and seller sign a legally binding contract for the purchase of a property. This contract outlines the terms of the sale, including the purchase price, any conditions that need to be met before the sale can go through, and the date of completion (when the keys will be handed over).
Once the contract has been signed, it`s exchanged between the buyer`s and seller`s solicitors. This is usually done electronically, though sometimes physical copies are exchanged. From this point on, both parties are legally bound to the terms of the contract.
Why is contract exchange important?
Contract exchange is a crucial moment in the home-buying process. It`s the point at which both parties commit to the sale and it becomes legally binding. Until the contract is exchanged, either party can walk away from the sale without penalty.
Once the contract has been exchanged, the buyer typically pays a deposit (usually around 10% of the purchase price) to the seller`s solicitor. This shows that they`re serious about the purchase and have the funds in place to complete the sale.
It`s worth noting that until completion (when the keys are handed over), the sale isn`t completely guaranteed. There are still a few things that could go wrong, such as the buyer being unable to secure a mortgage or the property being found to have serious defects during the survey. However, once the contract has been exchanged, both parties are committed to seeing the sale through to completion.
What happens after contract exchange?
After the contract has been exchanged, the buyer and seller will work towards completion. This usually takes place a few weeks after contract exchange, though the exact date will have been agreed in the contract.
On completion day, the buyer`s solicitor will transfer the remaining funds (minus the deposit) to the seller`s solicitor. Once this has been done, the keys will be released and the buyer can officially move in.
In summary, contract exchange is the moment when a property sale becomes legally binding. It`s an important milestone in the home-buying process, signalling that both parties are committed to completing the sale. From this point on, the sale should proceed smoothly towards completion.Czytaj więcej