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Understanding exchange of contracts in a house purchase, what happens, when it occurs, and what it means for buyers and sellers.
Exchange of contracts is the moment when buying or selling a house becomes legally binding. Before exchange, either party can pull out without penalty. After exchange, you're legally committed to the transaction.
It's called "exchange" because your solicitor and the other party's solicitor physically exchange signed contracts, making the agreement legally enforceable.
At exchange of contracts:
Once contracts are exchanged, the sale is legally binding and both parties must complete the transaction.
Exchange usually happens:
The time between making an offer and exchanging contracts can vary from a few weeks to several months, depending on how quickly everything progresses.
The deposit is a payment you make at exchange to show you're committed to buying. It's typically:
If you're buying with a mortgage, your lender may allow you to pay a smaller deposit (like 5%) if you can't afford the full 10%.
If you pull out after exchange of contracts:
This is why it's important to be completely sure before exchanging contracts. Once you've exchanged, you're committed.
If the seller pulls out after exchange:
This is rare, but it can happen. Your solicitor will help you understand your rights if this occurs.
After exchange of contracts:
The period between exchange and completion is usually 1-2 weeks, though it can be longer or shorter by agreement.
Once exchange has happened, the completion date is fixed. However:
If you need to change the date, speak to your solicitor as soon as possible.
Home & Lifestyle Writer
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