Buyers and sellers have the time up to exchange of contracts to pull out of the deal without penalty , this does happen with frequency in England as either party has no commitment other than any side payment they might of made to the buyer or estate agent to secure the deal ( deposits before exchange payable on acceptance off offer to the Vendor or estate agent to try and stop people wasting time on the deal ) Exchange of contracts timescales depend on the size of the chain and the readiness at the start of the buying selling process of the parties involved .
The solicitor has a list of things to tick off before recommending an exchange date these things are listed below but don’t encompass everything as there a million things that can delay or stop exchange.
1. Finance in the form of a mortgage, cash or bridging loan etc, this needs to be firmly in place before a solicitor will allow a recommendation for exchange. For cash purchase the solicitor will need to see 3 to 6 months of bank statements that they will go through and ask any questions on anything that is in the bank account that needs explaining .
Mortgages and bridging loans a copy of the offer will be emailed or posted to the solicitor the solicitors copy will have a list of conditions to satisfy sometimes referred to as special conditions, ranging from additional deposit checks, items on the survey that need further checking timber and damp reports etc, the solicitor will need to satisfy all of these things and get notice from lender that mortgage finance funds are ready to be released.
2. Searches, these are a massive part of the process especially if buying with a 3rd parties money that will be secured on the property, they will insist on a searches usually Local authority, environmental and Chancel , when the searches are bag anything that flags up issues like potential for flooding or near to a mine the solicitor will need back enquiries or reports or indemnity cover in place so that any issues on the searches are covered or explained to the point it satisfies the buyer and lender .
3. Land registry search, this is usually done before the searches as this will identify the actual area the search needs to cover, the land registry can uncover work that has been done that needed planning permission, leases should be registered and anything wrong with the title should be uncovered like additional charges including ones secured by the police etc .any anomalies will need to be dealt with before exchange.
4. Management packs if leasehold the solicitor will need to write to the freeholder and get a pack filled in asking questions about service charge and ground rent being up to date etc and anomalies will need to be sorted before exchange.
5. Booking removal companies, this can be an issue on an exchange that’s near completion if removal companies are fully booked already.
6. The above are some of main things that need to be satisfied to allow exchange , if there is a chain all the people in the chains solicitors have to have all the things that could cause a problem or stop funds being released before exchange can happen this can take months .
7. If no chain exists and the buyer is paying in cash after the money has been through money laundering the buyer can force exchange against the solicitor’s advice by providing a signed letter from the buyer accepting all the things that might be an issue in the Future.
Exchanging contracts
During the exchange of contracts, the solicitor or conveyancer will read out the contracts over the phone in a recorded conversation.
They will make sure the contracts are the same and then post them to each other.
Once contracts have been exchanged and you’re legally bound to buy the property to:
- tell the freeholder (if it’s a leasehold property) you’re the new owner
- check the solicitor/conveyancer has registered transfer of ownership with the land registry
- If it’s a share of freehold purchase, the solicitor will arrange for a new share certificate to be issued.
Exchanged contracts are legally binding and will usually be done with a 10% of the purchase price payment, once exchanged if you try to pull out you will legally forfeit the deposit and possibly be sued by the vendor if they really wanted to be awkward.
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