House Sale Exchange of Contracts: What You Need to Know
Buying or selling a house is a significant transaction that involves many legal procedures. One of the most critical processes in this transaction is the exchange of contracts. This process is where the buyer and seller agree to the terms of the sale and sign the contract that makes the transaction legally binding.
If you are in the process of buying or selling a house, it is essential to understand the exchange of contracts process, including what it involves and how it impacts the sale. In this article, we will provide you with essential information to help you navigate this process with ease.
What is the Exchange of Contracts?
The exchange of contracts is the point in a property sale where both the buyer and seller have approved the terms of the transaction and have signed the contract. Once this contract has been signed, it becomes legally binding, and both parties are obliged to complete the sale.
Until the contracts have been exchanged, either party can back out of the transaction without penalty. Once the contracts are exchanged, however, the sale has been agreed, and both parties are committed to completing the sale.
What Happens During the Exchange of Contracts?
The exchange of contracts typically takes place between the buyer`s solicitor and the seller`s solicitor over the phone. The exchange usually happens after both parties have agreed to the price, completion date, and any other terms of the sale.
During the exchange, the buyer and seller`s solicitors will read out the details of the contracts and confirm that they agree with the terms. Once both parties are satisfied, the contracts are signed, and the exchange is complete.
After the exchange, the buyer`s solicitor will send the deposit to the seller`s solicitor. This deposit is usually 10% of the purchase price, and it is a sign of the buyer`s commitment to the sale.
What Happens After the Exchange of Contracts?
After the exchange of contracts, a completion date is set, and both parties work towards completing the sale. On the completion date, the buyer`s solicitor will transfer the balance of the purchase price to the seller`s solicitor, and the keys to the property will be handed over.
It is worth noting that once the contracts have been exchanged, the buyer is responsible for the property`s insurance. This is because the buyer has now entered into a legally binding agreement to purchase the property.
Conclusion
The exchange of contracts is a crucial process in the sale of a house. It is essential to understand the process and what it entails to avoid any confusion or disputes. By working with an experienced solicitor, you can navigate this process with ease and ensure that your home sale is completed smoothly and efficiently.