Exchanging contracts and settlement when buying a home (2024)

FAQs

What can go wrong between exchange and completion? ›

The period between exchange and completion, while usually short, can be fraught with potential issues. Some of these challenges include: Financial Delays: Problems with mortgage funding or unexpected costs. Legal Issues: Unresolved legal queries or documentation errors.

Once contracts have been exchanged, the transaction becomes legally binding. This means that if the buyer or seller decides to drop out of the transaction, they will most likely face financial penalties. Both solicitors then agree on a completion date.

Exchange of contracts is a crucial part of the conveyancing process whereby the buyer and seller contractually agree to complete the transfer of the title between each other on a future date called completion. Buyer – If you don't make the completion, you will lose your deposit and could be at risk of being sued.

You can expect to wait between 1 day and 2 weeks between exchange and completion. However, in some circ*mstances, buyers and sellers agree to exchange and complete on the same day or wait longer – sometimes even months. Either way, if you have just exchanged contracts (or about to) on a house sale, congratulations!

You can have as long as you like between exchange and completion, as long or short as the chain agrees. Common choices are 3 days, 1-2 weeks, or 1-3 months. A same-day exchange and completion should be avoided.

Many things that can hold up the exchange of contracts. These include, but are not limited to: Inefficient Enquiries – If your solicitor is unhappy with their answers to their queries, they won't complete. Slow Buyers/Sellers – Sometimes it's the buyer or seller holds things up (deliberately or otherwise).

Can you pull out of buying a house after a survey? Yes, there is nothing legally binding you to the purchase at this point. If the problems found in the survey cause you to you change your mind about buying, you can pull out of the sale.

Once the contracts have been exchanged, the buyer and seller can't back out. The exchange can only happen once your deposit is in place and ready to go. By this stage, you'll have approval for your mortgage.

The time it takes to go from exchange to completion is decided by the buyer and seller. It's typically a week. It can sometimes be affected by other parties within the chain. For example, if the seller is waiting for a house purchase of their own to go through before moving out.

Backing out of escrow

“If the buyer has no contingencies left to void the contract, and decides not to sign, the buyer is likely in default of the contract,” says Rodgers. “This could mean loss of deposit, but it could even go beyond that.”

What can a seller do if a buyer fails to complete a purchase? ›

Bring a lawsuit for damages: The seller has the right to file a suit against the buyer for damages, which may include additional losses incurred by the seller.

When a buyer won't close or does not complete an agreement without cause the buyer will be responsible for making the seller “whole”. This means that the seller is entitled to be put in the same position as the seller would have been had the buyer completed the transaction as scheduled.

In exceptional circ*mstances the agreed completion date can be changed, but this is subject to consent being provided by all parties and they are not obliged to agree.

The biggest downside of simultaneous Exchange and Completion is that both parties will need to do all of this preparation without the security of the other party actually being bound, as there is no obligation on either party to complete the sale until contracts have been exchanged.

Based on the typical stages outlined earlier, conveyancing for a no chain property transaction takes 8-12 weeks on average. However, various factors can result in faster or slower timescales: Quickest: As fast as 4-6 weeks if all goes smoothly. Average: 8-12 weeks for a standard transaction.

Although it's rare for a seller to allow a buyer to access or even occupy a property before completion, it occasionally happens. For example, it might occur following exchange of contracts if synchronising completion of your sale and purchase proves impossible.