What is exchange of contracts?
It is the formal process whereby you become legally committed to proceed with the sale or purchase of your property. Exchange of contracts is dealt with by us, over the telephone. You do not need to be present when exchange takes place but we will need your authority to create such a legally binding obligation.
Exchange of Contracts is the stage at which everyone is legally committed to proceed with the transaction on the agreed Completion date. Exchange takes place between the seller’s solicitor and the buyer’s solicitor on the telephone. Each solicitor will be holding a Contract signed by their clients. Exchange can only take place when a Completion date has been agreed and each solicitor is instructed by their clients to Exchange. During Exchange the two solicitors agree on the telephone to date the Contracts and fill in some other information – including the Completion date and the deposit. Once Exchange of Contracts has taken place the sellers and the buyers are legally committed to proceed and cannot then back out of the transaction without risking heavy financial penalties.
Under English law a contract for the sale of land must be in writing and this is achieved by each party to the transaction signing a separate copy of a written contract for sale and the buyer’s solicitor and the seller’s solicitor then exchange those written contracts so that the buyer has the sellers signed contract and vice versa. The arrangement to exchange contracts is now done over the telephone, at which time the contract becomes binding and physical exchange of contracts occurs a few days later by post.
