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The exchange of contracts is the point at which the sale of the property becomes legally binding on both sides. If the buyer withdraws at this point then they can lose their deposit, if the seller withdraws then they can be sued for breach of contract. Before the contracts are signed the following checks need to have taken place:
- Are the contracts accurate and in order?
- Have the both parties agreed on the fixtures and fittings that are to be included with the property?
- Have all modifications or repair work for which the sale was contingent on been completed?
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You will now sign the contract at which point the sale becomes legally binding. If you do not understand anything on the contract then you should consult with your solicitor for a further explanation. Only sign the contract when you are happy that you fully understand its implications. Once the contracts are signed they are exchanged between the buyer's and seller's solicitors.
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At this point the deposit will be paid to the seller with the remaining balance being paid in full on the agreed completion date. The deposit is usually 10% unless negotiated otherwise. If you do not have the funds to pay the deposit at this time you may require what is known as a bridging loan from your bank to cover the temporary shortfall. Bridging loans however usually come with a high rate of interest so it is not advisable to rely on this.
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The completion date is usually within 28 days from the date the contracts are exchanged but can be as little as 24 hours. Before the completion date the buyer's solicitor will usually carryout a number of final checks. The solicitor will make Land Registry checks to ensure that nothing is registered against the seller. These checks could reveal undisclosed mortgages or disputes. They will ensure that any Land Registry fees are paid along with any Stamp Duty.
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