What is the difference between exchange and completion?

When you’re buying or selling a house, legal paperwork can be confusing. Two common terms in the process are exchange and completion. But how do they differ and do they matter? This guide explains what you need to know.

Exchanging contracts

Once the buyer and seller have all their paperwork in place regarding searches, queries and any other issues relating to the property, you are at a stage where contracts can be exchanged.

The buyer and seller will sign identical documents, and both solicitors will exchange the contracts at a set time.

When this happens the buyer pays a deposit, usually of ten per cent. This is the moment when your agreement becomes legally binding and neither the buyer nor the seller can back out without major penalties.

If you're in a property chain, the solicitors will wait until every party in the chain is happy to go ahead before contracts are exchanged. This is where there are often delays in chain situations.

Completion

When contracts are exchanged, a legal date for completion is also set. Traditionally this was a week after exchange, but it can be anytime agreed by the buyer and seller.

Leaving a longer gap allows more time to organise a removal company, pack belongings, arrange essential works on your home and change address information.

Research says that almost half of property completions take place on Fridays, but that doesn’t have to be the case. You can set any day of the week that suits you and the seller.

As a buyer, your role on completion day is very easy, although it can feel stressful. You wait for a phone call from your solicitor confirming that your mortgage and deposit have been transferred to the seller and completion has taken place.

These days, money is transferred electronically so your solicitor may request your deposit and mortgage funds in readiness to pass them through the chain. The higher you are in a chain, the later in the day the funds may be with your solicitor.

Assuming everything goes to plan and all funds have been transferred, you can collect the keys from the estate agent and start moving in as soon as the seller has vacated. It’s then finally time to enjoy your new home!

If you are looking to sell your house, contact us today and our experienced team will be delighted to help.