What time of day does exchange of contracts happen: A Complete Guide
Approximately 100,000 households in the United Kingdom will move to a new home every month. Buying or selling a property involves going through some essential steps, and one of the most crucial is the exchange of contracts.
The contract exchange is when the deal becomes official, and the buyer and seller promise to complete the sale. A common question is, “What time of day does exchange of contracts happen?”.
In this comprehensive guide, we will explain the exchange of contracts, including why the timing of this step can vary. Whether you’re new to real estate or have some experience, this guide will help you understand this crucial stage.
What does exchange of contracts mean?
You may ask yourself, “What is exchange of contracts?”. To grasp the timing better, let’s first explore what the exchange of contracts entails and why it holds such significance.
Before exchanging contracts, either party can withdraw without facing legal consequences. The exchange of contracts is the critical stage where the property deal becomes a legally binding contract.
Any delays or attempts to back out after this exchange may result in significant penalties. This stage ensures certainty for everyone involved and is a crucial milestone in the property buying or selling process.
Each party must take various essential steps before exchanging contracts. These involve conducting surveys to assess the property’s condition, performing searches to gather important information, and raising enquiries to address any uncertainties.
What happens after enquiries are answered?
After resolving all enquiries and negotiations, the buyer’s solicitor will send them a Report on Contract. This report outlines what the buyer is purchasing, highlights findings, addresses concerns, and provides advice. Both parties then need to sign a transfer deed, known as a TR1 document.
Before the contract exchange occurs, the buyer and seller must have agreed on a completion date. This is especially important if you intend to move out of or into the property immediately. When everything is in order, both parties actively exchange contracts, and the buyer places their deposit.
What time of day does exchange of contracts happen?
The exchange of contracts doesn’t have a set time or day, but it often occurs around midday. The selected time depends on the specific circumstances of each transaction and the solicitors’ and parties’ availability and readiness.
Typically, solicitors manage the exchange of contracts, so the buyer and seller do not need to be physically present. The actual exchange is a quick step, but coordinating with everyone involved in the chain can take some time during the day.
Both solicitors collaborate closely with each other in the days before the exchange to ensure everything is in order. While buyers or sellers may suggest their preferred exchange time, flexibility is crucial, especially in complex chains.
We’ve compiled some general guidelines to keep in mind as you approach your exchange of contracts:
1. Mostly Midweek
Most exchanges occur midweek, with the highest volume observed Monday through Wednesday. A relatively lower frequency of exchanges happens at the workweek’s beginning or end.
2. Prime Time
Most exchanges happen in the morning, with the peak exchange window between 10 am and noon. This allows the solicitors ample time to prepare and complete the process. Many mortgage lenders prefer exchanging contracts after 10 am. This allows enough time for funds to transfer on the same day.
3. End of Week Exceptions
If a contract exchange happens on a Friday, it will typically occur earlier in the day. This ensures the solicitors have extra time to deal with potential issues before the end of the business day.
4. Beat the End of Month Rush
At the close of every month, the number of exchanges rises as buyers and sellers aim to conclude the month and quarter. Scheduling your exchange of contracts earlier in the month is preferable.
5. Holiday Periods
Exchange of contracts may happen later in the day or week during public holidays or when solicitors are short-staffed. Keep this in mind when choosing the day for your exchange.
What happens on exchange day?
On the exchange day, each party’s solicitor will have a signed contract in their possession.
They will ensure the contracts are identical by reading them aloud over a recorded phone call. Each solicitor has their individual procedures, but generally, the exchange process follows this sequence:
Both solicitors collaborate on a final checklist of tasks, ensuring everything is in order to proceed. The buyer’s solicitor will confirm they have cleared deposit funds, an insurance policy and, if needed, a mortgage offer.
The solicitors coordinate the exchange time through phone calls and emails, striving to accommodate client requests whenever possible.
Transfer of Funds
The buyer’s solicitor transfers the house deposit to the seller’s solicitor, who confirms they’ve received it.
At the agreed time, each solicitor signs two copies of the contract. They keep one copy and send the other to their counterpart via email, post, or courier.
Confirm the Exchange
After the exchange of contracts, the solicitors inform their clients that the transaction is now legally binding.
Exchange of contracts deposit
Typically, the buyer pays a 10% deposit upon exchanging contracts. Negotiating the price is sometimes possible, but the final decision on whether to lower it rests with the seller. This deposit serves as a financial commitment and signifies the buyer’s serious intent to proceed with the purchase.
Selling a property?
Using your buyer’s deposit to cover the deposit for your purchase is standard practice. If you are only buying, the deposit amount may vary based on the size of your mortgage, if applicable.
Will my solicitor tell me when we exchange contracts?
Yes, your solicitor will usually inform you about the upcoming exchange of contracts by phone call. Make sure you want to go ahead before signing the exchange of contracts because the process becomes legally binding once you do.
How do solicitors exchange contracts in a chain?
In a property chain, your solicitor releases the contract only if everyone in the chain is ready to proceed. If one person withdraws or causes a delay, it can impact the entire process. The exchange of contracts starts from the bottom of the chain and progresses upward.
Longer chains involving multiple buyers and sellers can be challenging to coordinate. Remaining flexible on timing when working within a complex chain is crucial.
What can hold up exchange of contracts?
Typically, selling a house from initial offer to the exchange of contracts takes 8 to 12 weeks. Strategies exist to speed up the exchange process, but remember that some factors might still influence how long it takes. Certain obstacles tend to arise repeatedly. We’ve compiled a list of the most prevalent ones below:
– Delays caused by local authority searches and surveys
– Lost, incorrect or incomplete vital documents, such as title deeds
– Poor communication, such as not signing or returning documents on time
– Unanswered questions or lack of disclosure, such as of a gifted deposit
– Complications in the chain
– Cold feet
– Market conditions
– Mortgage problems, such as mortgage offers expiring
– Poor choice of professionals, such as slow service from conveyancers
– Gazumping and gazundering
1. Searches and surveys
Searches and surveys often consume much of the time between accepting an offer and exchanging contracts. Delays may occur because of slow report completion by surveyors or busy conveyancers needing to organise searches promptly. Furthermore, some specific local authorities have a reputation for delivering their local authority searches slowly.
Conduct a final search just before completion day if the seller has stayed in the property after exchanging contracts. This ensures everything is in order before the buyer takes possession of the property.
2. Enquiries and Negotiations
Upon exchanging initial forms and documentation, the buyer’s solicitor may initiate property-related enquiries. These enquiries ensure the buyer has all the necessary information before committing to the purchase. The time it takes to answer these questions can impact the overall timeline. Not providing signatures, orders, or documents when required can cause delays.
Sometimes, questions need to be answered, primarily related to planning permission or covenants. If a conveyancer isn’t satisfied with the seller’s responses, they won’t allow the process to progress. Delays in responding may result in more questions or negotiations, so stay responsive and reply promptly to your solicitors.
Please agree on a revised price after searches and surveys to ensure the sale is on time. Disagreements about who is responsible for building repairs or paying for indemnity insurance can also occur. Both parties must communicate effectively and reach a consensus to expedite the transaction.
3. Housing Chain Complexity
When people are buying and selling homes at the same time, it forms a housing chain. The success of each deal depends on the others in the chain.
The housing chain’s complexity can impact the speed of the exchange process. In these situations, exchanging contracts can get complicated. Each solicitor has to check completion terms and exchange details with the solicitor below them in the chain. Delays at any point in the chain can impact the entire process.
Moreover, the chain may still be incomplete when you become part of it. This might result in waiting for someone else to find a buyer or seller for their property.
Make sure you stay in touch with your solicitor, providing them with updates on all links in the chain and sharing crucial information. This will help ensure smooth coordination among all parties involved.
4. Seller’s Motivation
The seller’s motivation level plays a significant role in the speed of the exchange process. A seller actively searching for a new property and providing regular updates is more likely to expedite the process. Conversely, the seller’s lack of active engagement or motivation may cause delays and frustration for the buyer.
5. Choice of Solicitor or Conveyancer
Choosing a reliable and efficient solicitor or conveyancer is crucial when moving house.
Solicitor taking too long with house purchase?
If you’re worried about how fast or dependable your conveyancing solicitor is, talk to them and share your concerns. If they don’t improve, and you’re anxious it might affect your sale, speak to the practice manager and file a complaint.
How to put pressure on solicitors
You can contact your solicitor as often as needed. But remember that reaching out to them daily could cause inconvenience and slow their work. Also, be mindful that your solicitor may charge you a fee each time you contact them.
6. Legal and Financial Factors
Various legal and financial factors can impact the exchange process. In a straightforward sale, getting a mortgage offer, doing essential checks and sorting out financial matters all require time. Complicated transactions can add to delays. Additionally, external factors such as changes in lending requirements can influence the timeline.
Ensuring solicitors have certified copies of identification and all required signatures to execute contracts is essential. Missing documents can cause unnecessary delays, so it is crucial to double-check everything before submitting them.
Confirming that completion funds are ready is essential. Buyers should have mortgage advances and final payments ready to transfer quickly on completion day.
Give your solicitors ample notice regarding target exchange dates, planned absences, or funding. This preparation contributes to a smoother and quicker process.
Legal document management software
If you’re a property investor or developer looking to simplify the contract exchange process, consider using DocFlite. DocFlite, with its signature blend of efficiency and simplicity, streamlines the contract exchange process for property developers and investors. By harnessing it’s suite of features to manage contracts, forms, and other document processes easily, you can streamline your workflow and improve productivity by navigating paperwork quickly and successfully.
Exchange of contracts to completion
Once you exchange contracts, reaching your completion date typically takes between 7 and 28 days. This time frame allows buyers and sellers to prepare for their moves adequately. However, the duration may vary based on the preferences of the buyer or seller. For instance, if the seller cannot move to their new home within this time frame, they might request a more extended completion date.
How long from raising enquiries to completion?
Typically, the process takes 4 – 12 weeks, but it may extend if there are more enquiries or the seller is slow in responding. Extending your deadline by a week or two is fine. It might save you from more significant issues later on if there are any critical factors you are unaware of.
Shortest time between exchange and completion
After exchanging contracts, the duration until the entire process concludes can vary. Some people decide to exchange contracts and complete them on the same day, while others prefer to wait, sometimes for several months. Solicitors generally advise against exchange and completion same day to avoid unnecessary complications.
In the UK property market, completing house sales on Fridays is common. This enables solicitors to tie up any loose ends during the workweek. And ensures a smooth transition for new owners over the weekend. While there is no strict rule that sales must always happen on Fridays, many do occur on the last Friday of the month.
Leading property website Rightmove offers further insight into what to expect on completion day.
Predicting an exact time for the exchange of contracts is challenging. However, preparing thoroughly and collaborating closely with your solicitor is the backbone of this significant transaction. Before you know it, the completion day will arrive, and you will have successfully bought or sold your property!
Disclaimer: The information provided in this article is for information purposes only and should not be construed as legal or financial advice. Always consult with a qualified professional for specific advice tailored to your circumstances.