So, you’ve finally found your dream home and the buying process is well underway. One of the most significant stages in the home buying process is the exchange of contracts. But what exactly happens during this crucial step? In this article, we will guide you through the process of exchanging on a house and shed light on what you can expect.
The Exchange Process Explained
When you exchange contracts on a house, both the buyer and the seller become legally bound to complete the transaction. This means that the sale is almost final, and there is little room for backing out without facing significant financial consequences. It is important to note that the exchange occurs after the offer has been accepted, the necessary checks have been carried out, and the terms of the contract have been agreed upon by both parties.
Once the exchange of contracts takes place, a deposit is usually paid by the buyer. This deposit, typically around 10% of the purchase price, serves as a commitment from the buyer to proceed with the purchase. If the buyer fails to complete the transaction after the exchange, they may lose their deposit. On the other hand, if the seller backs out, they may be required to pay the buyer twice the amount of the deposit as compensation.
What Happens After the Exchange?
After the exchange of contracts, there are a few important steps that follow. One of the key tasks is to ensure that buildings insurance is in place. This is crucial to protect both the buyer and the lender in the event of any damage to the property between the exchange and completion dates.
The completion date is a significant milestone. On this day, the remaining balance of the purchase price is transferred, and the property legally changes ownership. Typically, completion occurs a few weeks after the exchange of contracts, allowing both parties enough time to finalize their arrangements.
Before Completion: Final Checks and Legal Requirements
Before completion, the buyer’s conveyancer or solicitor will conduct a final search to ensure no changes have occurred that could impact the purchase. This may include searches for any planned developments in the vicinity, land registry checks, and various other legal requirements. Any outstanding concerns or issues should be addressed before the completion date.
Completion Day: The Big Event
Finally, the day arrives when you can pick up the keys to your new home. Once the funds have been transferred, the seller’s solicitor will confirm receipt and instruct the estate agent to release the keys to the buyer. At this point, you officially become the proud owner of the property!
Final Thoughts
Exchanging on a house is a major milestone in the home buying process. It signifies the commitment and legal binding between the buyer and the seller. Understanding the process and what to expect before, during, and after the exchange can help ensure a smooth and successful home purchase.