When a seller accepts an offer on their property, the sale approaches its conclusion: exchange and completion. After an exchange of contracts, a completion date is set. This is the date when ownership transfers to the buyer. These are the last steps before a sale is complete.
While this is an exciting period for buyers and sellers, it can also be quite stressful. A lot can happen between exchange and completion, so it's important to prepare as much as possible.
In this section, we'll talk you through exchange and completion in a step-by-step format. We'll also evaluate some of the risks involved throughout the process.
The difference between exchange and completion is fairly straightforward: you’re legally bound to complete the transaction after an exchange of contracts, while you fully own the house after completion. Below, are their full definitions:
Exchange refers to the exchange of contracts between the seller's solicitor and the buyer's solicitor. After the exchange, both parties are legally bound to complete the transaction. It is during this process, that a completion date is set.
Completion refers to the completion date of the property transaction. It takes place after the seller's solicitor confirms they have received payment for the property. On the completion date, the seller's agent meets the buyer to hand over keys to the property. The date marks the final transfer of property ownership.
The average wait is 2 months from the date the buyer first handed in their mortgage application until exchange. The time between a mortgage offer and an exchange of contracts depends on how quickly the buyer's conveyancer is able to get everything ready.
If you've accepted a verbal offer on a house, you might be wondering whether it's illegal to pull out. No, offers are not legally binding in England until contracts have been exchanged. However, it’s considered bad etiquette to pull out of an offer, especially if you've received a higher offer. This is called gazumping.
Before an exchange of contracts can get underway, the buyer and the seller need to get their affairs in order. While both parties have certain responsibilities, buyers have much more to deal with.
If you're a buyer you should
Arrange Buildings insurance on your property. Buildings insurance covers your home against damage to its structure and fixtures. Packages usually cover damage by floods, fires, storms and vandalism.
Check your surveys. Are they complete and are you happy with the results?
Ensure you have your mortgage offer in writing. You don't want to lose your mortgage after you agree to purchase the property.
Make sure you have the deposit funds ready. The deposit is usually 5 - 10% of the property price, but your conveyancer will advise on the final figure.
Make sure you know what fixtures and fittings you get to keep. You don’t want to be misled about what your purchase includes. If you keep a list, you can ensure you are compensated if they don’t abide by what was agreed.
Ensure the Energy Performance Certificate (EPC) rating is to your liking. Scores of 'A' or 'B' are the best, while scores of D and E are poor. You can read more about EPCs here in our guide to 'Energy Performance Certificates (EPC)'.
If you're a seller you should
Respond to all of the buyer's enquiries. Clear answers will help the exchange run smoothly.
Ensure you have all the relevant documentation for the buyer's inspection. This includes warranties, certifications of building works, and guarantees.
A contract exchange might not happen on the planned date due to a couple of reasons.
If you're in a property chain, your solicitor will have to call several other conveyancers up the chain. If one conveyancer isn't available, or the process overruns, they will have to start all over again the following day.
If you're not in a property chain, this is less likely to happen - but a conveyancer might still change dates. That's why it's important to pick a firm that you trust. The best conveyancers will accommodate your dates using up-to-date technology.
The exchange of contracts usually takes place over the phone. It is carried out by the conveyancers of the buyer and seller. What happens at the exchange of contracts is:
Buyers and sellers must
The buyer's lender completes one last survey of the property before releasing the mortgage funds. Once these funds are transferred to the seller, the buyer's ownership of the property is registered with the Land Registry.
The buyer is ready to collect the keys to the property on completion day.
The best way to agree on a completion date is to compromise. There are usually 2 to 4 weeks between exchange and completion to allow all parties to make moving arrangements. There's a lot of stuff to plan, including:
The more people involved in a property chain, the more time it takes to find a date that can work for everyone. The odds are no one will find a date that works completely for them.
For most people who work full time, the best day to complete is Friday. This gives you enough time to move and unpack your things.
Can you move on a different day to Friday?
Yes you can move any day that works for you. Moving on a day mid-week has its benefits. If you move to a new home on Friday, you'll spend your weekend moving everything around, which means you'll have less time to relax. Also, if a payment issue arises, you won't have to wait over the weekend to sort it.
You can pull out after a contract exchange, but this will breach the terms of your contract and incur financial penalties. It's rare for either party to pull out after an exchange of contracts, because you are legally bound to complete the transaction.
If you're a buyer looking to pull out after a contract exchange, it's important to remember that you have the most to lose. Your house deposit (plus interest) will be forfeit.
Never proceed to the exchange if you have doubts about the transaction. If you do need to pull out due to unforeseen circumstances (bereavement, trauma), you might be able to negotiate on compassionate grounds. You could get the seller to reduce the scale of your financial losses.
If you're a seller looking to pull out after a contract exchange, this isn't as expensive. You will however, be liable for the buyer's conveyancer and surveyor fees.
Remember, future estate agents will be wary of your commitment to selling if you pull out at such a crucial stage.
While exchange and completion has a lot to do with solicitors, your estate agent shouldn't be idle. A good estate agent will be proactive in motivating both parties to complete the sale:
Your estate agent should
Update the buyer and seller: As both parties are unable to communicate with one another's conveyancer, agents should update parties on the progress of the sale.
Help negotiate: Thanks to their years of experience, agents can negotiate between both parties should any issues arise.
Provide reassurance: This is a stressful period, but a good agent has seen many sales through to the end. A good agent will provide reassurance to both parties throughout the exchange and completion process.
You can find the right estate agent for your sale with our free Estate Agent Comparison tool.
It takes 2 minutes. 100% free. No obligation.
While exchanging contracts makes both parties obligated to complete the sale, there are several things that can go wrong before completion:
Let's take a closer look at these in more detail:
Unless you are, or selling to, a first-time buyer or cash buyer, your sale is likely part of a property chain.
A property chain involves several sets of buyers and sellers relying on one another to complete sales. A seller might hope to use the equity from their property's sale to purchase a new home. This makes them a buyer reliant on another transaction going smoothly.
A property chain can break for a number of reasons. For example, if a buyer further up the property chain has their mortgage offer revoked, this will have a knock-on effect on all the other parties.
If a property chain breaks, everyone in the chain will find themselves in breach of contract if they cannot complete the transaction. If this happens to you, it's important to move fast in order to prevent the worst outcome.
We recommend contacting your conveyancer immediately if the chain does break. Account for all your costs, expenses and losses by gathering together any evidence you have, including receipts and invoices. Depending on where in the property chain you are, you’ll either have to make claims against a buyer or seller, or prepare for claims to be made against you.
If the house is damaged as a result of fire, flood or storm before the completion date, the sale must still go ahead. Who is liable for these damages depends on the terms negotiated in the contract of sale.
There's a few things you can do to prevent any problems from occurring between exchange and completion:
Get a good conveyancer: One of the best ways to minimise problems between exchange and completion is a reliable conveyancer. A good conveyancer will ensure funds are delivered on-time. You can read more about 'How to find a good conveyancer' here.
Manage your budget: Make sure you have the right funds for removal day and any other extra fees you might need to pay on completion day.
Maintain healthy dialogue: Whether you're a buyer or seller, it's best to keep things open and friendly. Ensure all communication is clear and transparent.
Most people usually wait 1 to 3 weeks between exchange and completion, but this period can be as long as 2 months. There's several reasons why this might be the case:
In rare circumstances, exchange and completion can happen on the same day.
The time between exchange and completion depends on what both parties agreed in the contract exchange. This date is also subject to the availability of parties across the property chain. If it's a long chain, the chances are someone will need to accommodate a life event, like having a baby.
A longer wait period has its benefits. It's important you have enough time to find a removal company you can trust. Moving home is a stressful time, so ensure you have a good window in which to book.
You could exchange and complete the sale on the same day, but we wouldn't recommend it. Moving these dates together will increase the possibility of something going wrong:
Make sure you spread out your exchange and completion dates. Book your removal companies with confidence, rather than in a rush.
Between exchange and completion, both parties should make arrangements to meet the set date for completion.
If you're a buyer you should...
Your conveyancer should be working with your mortgage company to ensure the correct amount of money is transferred on completion day. They should also be drawing up a final statement for completion day.
If you're a seller you should...
Your conveyancer should confirm a final redemption amount with the buyer's mortgage lender. They should also draw up a final statement for completion day.
If you fail to meet the completion date, you will be in breach of the sale contract. As with pulling out of the sale, the buyer has the most to lose in this scenario.
If you're a buyer and you fail to complete, you'll be served a notice to complete the sale within 10 working days (2 weeks). This is the conditional period before contracts are rescinded. During this period, you will be liable for interest on any funds not sent through to the homeseller.
Not completing within 10 working days will lead to
The seller will be able to pursue losses if they can't sell their property for the same sale price.
If you're a seller and you fail to complete, the buyer is free to rescind the contract (unless you've already withdrawn it).
You will also be liable for:
On completion day, the property transaction is finally concluded. Whether you're a buyer or seller, this is usually a massive relief.
Of course, there's still time for things to go wrong - the biggest issue on completion day is the buyer's funds being transferred on time. If you're a buyer, your conveyancer should aim to transfer payment before 3pm on Friday. Any payment after this time may not be processed until the following day.
Should everything go according to plan, the conveyancers of both parties follow a schedule like this:
Once the conveyancers have confirmed their payments, the buyers and sellers will follow their own schedule:
Speeding up the process of exchange and completion has a lot to do with being prepared for each stage of the home selling and home buying process.
If you're a buyer
If you're a seller
When your offer is accepted by a home seller, you need to exchange contracts and agree on a completion date. Your conveyancers will contact each other (usually by phone) to exchange signed sales contracts. If you are part of a property chain, the other chain parties must exchange contracts on the same day. This is to ensure all parties are able to conclude their sale. When contracts are exchanged, a completion date is set.
The completion date is the day your house purchase is concluded. On completion day, your funds are transferred by your conveyancer to the seller's solicitor. After the buyer has moved out (usually by 1pm) you can collect the keys to your new home and start moving in.
You receive funds from your house sale on completion day. After deducting both their fee and your estate agent's, the conveyancer transfers your funds to your account.
Exchange is when the sale becomes legally binding, while completion is when the buyer becomes the new owner of the property, so you would own the house after completion.
You can do building work between exchange and completion by using a side legal agreement called a Key Undertaking. Home sellers will ask for a Key Undertaking if they need to get their property finished to a good standard. This can happen if the property has been vacant for a while and needs refurbishment.
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