Once Contracts are Exchanged, Is the House Ours?

Congratulations! You have successfully exchanged contracts on your dream house. But, does this mean that the house is officially yours? Well, not quite yet. Let`s take a closer look at what happens after contracts are exchanged.

What Does “Exchange of Contracts” Mean?

In the United Kingdom, exchange of contracts is one of the most critical stages of buying or selling a property. At this point, both the buyer and seller are legally bound to complete the transaction. Typically, it takes place several days or weeks before the completion date, which is when the property changes hands, and the buyer becomes the new homeowner.

So, once contracts are exchanged, the completion date is set, and both parties have agreed on the terms of the sale. The next step is to ensure that everything is in order and ready for the completion date.

What Happens Between Exchange and Completion?

The period between exchange and completion is usually referred to as the “gap.” During this time, the solicitors of both parties will work together to ensure that everything is in order for the completion date. This includes:

1. Verifying the transfer of funds: The buyer`s solicitor will verify that the funds are in place to complete the purchase.

2. Paying Stamp Duty Land Tax: The buyer`s solicitor will ensure that the necessary taxes are paid before completion.

3. Carrying out final checks: The solicitors will carry out final checks to ensure that all aspects of the transaction have been completed and that there are no outstanding issues that could affect the sale.

What Could Go Wrong Between Exchange and Completion?

Although rare, there are several issues that could arise between exchange and completion, which could put the entire transaction at risk. These include:

1. Failure to transfer funds: If the buyer fails to transfer the funds required to complete the purchase, the transaction could fall through.

2. Problems with the property: If there are any issues with the property, such as damage or a change in circumstances, the buyer may decide not to proceed with the sale.

3. Delays: Delays in the transfer of funds or completion checks could cause the completion date to be pushed back.

Conclusion

In summary, once contracts are exchanged, the house is not officially yours until completion. The period between exchange and completion is a critical time where several checks and processes are carried out to ensure everything is in order for the change of ownership. Although rare, there are several issues that could arise during this period, which could put the entire transaction at risk. Therefore, it`s essential to work closely with your solicitor and keep communication open to ensure that everything goes smoothly up to the completion date.