Understanding the Difference Between Exchange of Contracts and Completion in Conveyancing

When it comes to the conveyancing process in England and Wales, two significant milestones stand out: the exchange of contracts and completion. These terms often cause confusion among buyers and sellers, but understanding their differences is crucial for a smooth property transaction. Let’s delve into the details and shed light on these important stages.

Exchange of Contracts:

The exchange of contracts is a pivotal moment in the conveyancing process. It occurs when both the buyer and seller have signed identical copies of the contract and their respective solicitors or conveyancers swap (or exchange) these contracts. Here’s what you need to know about this stage:

1. Legally Binding: Once the contracts are exchanged, the agreement becomes legally binding. Both parties are obligated to fulfil their contractual obligations.

2. Deposit Payment: The buyer is typically required to pay a deposit upon exchange of contracts. This deposit is usually a percentage of the property’s purchase price (usually five or ten percent) and is usually held by the seller’s solicitor or conveyancer until completion.

3. Completion Date: The completion date is agreed upon during the exchange of contracts. It is the date when the property officially changes ownership and the buyer takes possession.

4. Consequences of Breach: If either party fails to fulfil their obligations after the exchange of contracts, they may be subject to financial penalties or legal action.

Completion:

Completion is the final stage of the conveyancing process. It is the day when the property officially changes hands and the buyer becomes the legal owner. Here’s what you should know about completion:

1. Transfer of Funds: On the completion day, the buyer’s solicitor or conveyancer transfers the remaining balance of the purchase price to the seller’s solicitor or conveyancer.

   If you are looking for a first rate conveyancing service why not give one of Alexander JLO’s specialist property lawyers a call on 020 7537 7000, click on the get a quote button or email quote@london-law.co.uk for a free, no-obligation quotation? Come and see what we can do for you.

   This blog was prepared by Alexander JLO’s property partner Matt Johnson on 27th February 2024 and is correct at the date of publication. Matt has many years of experience of dealing with property work and specialises in new build and shared ownership properties.  His profile on the independent Review Solicitor website and be found here