When moving house one of the problems encountered is the new terminology that you will encounter. Often phrases such as 'exchange of contracts' and 'completion' are known to your solicitor and estate agent but not to you. It's important to know the difference, and which stage of your sale or purchase they relate to, as both have significant implications for you.
Exchange of contracts is the stage at which you have agreed all the various terms on which you will buy or sell your property and includes the exact price to be paid taking account of any allowances (reductions to the price) to be made and any additional payments for contents. For contracts to be exchanged your solicitor also needs to have received all of your search results, have received your mortgage offer, and resolved all the legal queries and any problems. Before exchange of contracts can take place, everyone needs to have agreed the date for moving in. Once all of these issues have been resolved and agreed it is at this point that your solicitor will proceed with exchanging contracts with the solicitor acting for your seller or buyer. If you have a sale and purchase your solicitor will ensure that contracts are exchanged on your sale and purchase at the same time.
Exchange of contracts is very important because once it has taken place the contracts become legally binding and you are committed to selling or buying or both (as the case may be). This means that no-one will be able to pull out of the deal without being in breach of contract and incurring significant legal penalties. You do not move home on exchange of contracts, but you do set the date on which you move home (known as the completion date) which is also the date by which you must have all funds available to buy your new property.
It is therefore important that exchange of contracts is not confused with completion, and you leave a sufficiently large period of time between exchange of contracts and completion to allow you to finalise all matters in respect of your move before you have to vacate your property. Because anyone can pull out of the deal before exchange of contracts takes place your solicitor will advise you not to make any firm moving arrangements, such as booking your removals, until after exchange of contracts.
Completion is the day of moving, and is often fraught with difficulties, stress and pressure. You not only have to ensure that everything has been packed and that your removals are booked and ready, there is often a delay between you moving out of your old house and being able to collect the keys to enable you to move into your new house. Any such delay tends to be caused by issues with the banking system and the transfer of monies on the day of completion between all of the solicitors in the chain.
If there is a long chain, each solicitor has to send the money on to the next solicitor and that party will have to wait for money to be received (and sometimes mortgage funds to be received) before they can then send the money further up the chain. You may therefore have to be patient in waiting for your seller to receive the monies from your solicitor, before you're able to collect your keys and start to move in. Often the delay can mean waiting for a few hours, however, typically the delay is not too long and you should be able to move into your new property fairly quickly.
So to summarise, exchange of contracts is the point at which you are legally bound to sell or buy your property, and completion is the day when money changes hands and you move out of your old home and into your new one.
Are you are looking for expert conveyancing solicitors in Hull? Talk to Solicitors in Hull Myer Wolff. Ashley Easterbrook is a partner in the firm's private client department.
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