In the process of buying or selling a property in the UK, two crucial stages are “exchange” and “completion.” They may sound very similar, but they serve distinct purposes. Each marks a significant milestone in the property buying journey. In this article, we’ll explore the differences between the two, and why they’re important for both buyers and sellers.
Exchange of contracts
“Exchange of contracts” is where the buyer and seller legally commit to the sale/purchase of the property. It involves the exchange of signed contracts between the parties’ solicitors or conveyancers. During this part of the process, the following events take place:
Binding agreement
Once contracts are exchanged, both parties are legally bound to proceed with the transaction. This means neither party can pull out without facing financial consequences. This may include losing their deposit or being sued for breach of contract.
Deposit payment
The buyer usually pays a deposit (a certain percentage of the purchase price) upon exchange of contracts. This is their commitment to the transaction and provides the seller with financial security.
Completion date
The completion date is agreed upon at the time of exchange. This is when the remaining balance of the purchase price is paid, often by way of a mortgage provider. Legal ownership of the property transfers from the seller to the buyer on the completion date.
Completion
“Completion” is the final stage of the property transaction process. It’s the day when ownership of the property officially changes hands, and the buyer takes possession of the property. During this part of the process, the following events take place:
Transfer of funds
On the agreed date, the buyer’s solicitor transfers the remaining balance of the purchase price to the seller’s solicitor. This will usually be done online.
Handover of keys
Once the funds have been received, the seller’s solicitor confirms receipt to the buyer’s solicitor. The keys to the property are released to the buyer. The buyer can now move into their new home.
Registration
After completion, the buyer’s solicitor registers the change of ownership with the Land Registry. They update the property’s title deeds to reflect the new owner’s details.
Key differences
Timing is the main difference between exchange and completion. Exchange of contracts usually occurs a few weeks before completion. This provides both parties with time to make necessary arrangements, such as arranging finances and organising the move.
Another way in which exchange and completion differ is to do with the legal obligations. Exchange of contracts creates a legally binding agreement. However completion is when the property transaction is finalised, and ownership officially transfers from the seller to the buyer.
At Bell Estate Agents, we guide our clients through every step of the property journey, from listing to completion. If you have questions about the exchange and completion process, don’t hesitate to get in touch with our experienced team. We’re here to help make your property transaction a smooth and successful experience.
