Are you confused with the difference between the terms 'exchange' and 'completion'? If you're unsure, read the article below to find out what these terms really mean.
Purchasing and selling a home can be rather confusing and with a whole host of property terms being banded around, it's no surprise that the lines can get a little blurry! If you're purchasing or selling however, it's important to understand the selling timeline and with this, what the terms 'exchange' and 'completion' really mean.
The primary difference between exchange and completion is that the 'exchange' marks the exchange of contracts - an act which makes the sale legally binding between the buyer and seller. On the other hand, 'completion' is the date that the parties physically move and transfer legal ownership of the property - marking the last step for both the buyer and seller of the house. This is the day the money gets transferred and the buyer gets the keys for their new house. It's the day everyone is waiting for!
Whilst exchange and completion can sometimes occur on the same day, there is most often a gap of approximately two weeks to allow for the logistics of transferring the funds to take place.
Exchange of Contracts
An exchange can take place when the buyer's conveyancing solicitor is satisfied with all of the information provided by the seller's conveyancing solicitor. The buyer's solicitor will also require the mortgage offer (if required for the purchase) and will use this to make sure that all the conditions of the offer have been met. In addition, they must be satisfied with the searches that have been carried out on the property. At this point, both solicitors will be holding a signed contract from both parties. Then, a completion date can be agreed by both the buyer and the seller, as well as any other parties involved in the chain.
Once all of the above is in check, contracts can be exchanged and the buyer's deposit funds will be transferred to the seller's solicitor. The property transaction has now 'exchanged'.
After the exchange has occurred and if there is a mortgage on the property that is being sold, the seller's solicitor will get a redemption statement and pay off the mortgage on the completion date. This will be paid alongside any other invoices due, such as the estate agent fees.
Both the buyer and seller will then receive a financial statement. This document will breakdown the funds that must be paid between either the buyer or seller in order for completion to take place. At this time, final checks and searches will be undertaken by the buyer’s Solicitor.
Finally, the buyer’s solicitor will transfer the purchase money to the seller’s solicitor upon the completion date. As soon as these funds are received, we usually get a call from the seller's solicitor to 'release the keys!' to the new buyer. This marks the end of the sales process and congratulations are in order for both buyer and seller.
It's time to pop the bubbly and celebrate!
If you need any property advice please don't hesitate to get in touch with us on 01803 214214. or 01626 818212 Navigating the selling and purchasing process is often confusing and that's why we are here to help - all of our expert advice is completely free and without obligation.