Exchange of contract and completion are two important stages in the process of buying and selling property. Understanding what these terms mean can help both the buyer and seller navigate the transaction with confidence. In this article, we will define exchange of contract and completion, and explain their significance in property transactions.
Exchange of Contract
The exchange of contract typically occurs several weeks before the actual completion of the sale. This is the stage at which the buyer and the seller enter into a legally binding agreement to transfer the ownership of the property. Once the contracts are exchanged, the terms and conditions of the sale become legally binding on both parties.
At this stage, the buyer will usually be required to pay a deposit, which is usually 10% of the purchase price. This deposit is paid to the seller’s solicitor, and it acts as security for the seller until completion. If the buyer fails to complete the transaction, the seller can retain the deposit as compensation for any losses incurred.
Completion
The completion is the final stage of the property transaction, which typically takes place between two and four weeks after the exchange of contracts. This is when the ownership of the property is officially transferred from the seller to the buyer. At this stage, the buyer will pay the balance of the purchase price, and the seller will hand over the keys to the property.
On the day of completion, the buyer’s solicitor will transfer the balance of the purchase price to the seller’s solicitor. Once this has been received, the seller’s solicitor will confirm to the buyer’s solicitor that the transaction has been completed. The buyer’s solicitor will then notify the buyer that completion has taken place, and they will be able to collect the keys to the property from the estate agent.
Conclusion
In summary, the exchange of contract and completion are two important stages in the process of buying and selling a property. The exchange of contracts is when the buyer and seller enter into a legally binding agreement to transfer ownership of the property, while completion is when the ownership of the property is officially transferred from the seller to the buyer. By understanding these stages, both the buyer and seller can navigate the transaction with confidence and ensure a smooth and successful sale.
