When it comes to buying or selling property, one of the most important steps in the process is exchanging contracts. But what exactly does that mean, and what should you expect during this crucial stage of the transaction?
In simple terms, exchanging contracts is the moment when the buyer and seller become legally bound to complete the sale/purchase of the property. This means that both parties are committed to following through with the transaction, and if either party pulls out after contracts have been exchanged, they could face serious financial consequences.
During the exchange of contracts, both the buyer and seller will sign identical copies of the contract. The seller`s solicitor or conveyancer will then send the signed contract to the buyer`s solicitor or conveyancer, who will also sign their copy of the contract. Once both parties have signed, these copies will be swapped, and the transaction will be considered legally binding.
What happens after contracts are exchanged?
Once contracts have been exchanged, a completion date will be agreed upon. This is the day when the full payment for the property will be made, and the keys will be handed over to the buyer. This date will typically be a few weeks after the exchange of contracts, giving both parties enough time to prepare for the move.
Before completion takes place, the buyer`s solicitor will also conduct some final checks on the property to ensure that everything is in order. This might include checking for any outstanding debts or charges on the property, as well as making sure that all fixtures and fittings are included as agreed.
What are the risks of exchanging contracts?
It`s worth noting that exchanging contracts can be a risky time for both the buyer and seller. If the buyer pulls out of the transaction after contracts have been exchanged, they could lose their deposit and potentially face legal action from the seller. Likewise, if the seller pulls out, they could be sued for breach of contract and may have to pay damages to the buyer.
One way to mitigate these risks is to ensure that you have a qualified solicitor or conveyancer overseeing the transaction. They will be able to guide you through the process and help to minimize the risks of any potential legal issues arising.
In conclusion, exchanging contracts is a crucial moment in the property buying/selling process, and it`s important to understand the implications of this step. With the right guidance and support, however, completing this stage successfully can lead to a smooth and successful property transaction.