What is Exchange of Contracts and How Does it Differ From Completion?

I am often asked what is exchange of contracts and how does it differ from completion??Well, Exchange of Contracts is when a deposit is paid and the completion date is formally agreed and you can breathe a sigh of relief knowing you have an agreed move date.?At this point the contract is legally binding and should either party withdraw they may have to pay compensation to the other party.?This could mean losing any deposit paid and having to pay for any losses that the other party may have incurred.

You will have already signed your contract in preparation for the day of exchange and this will be held by your lawyer.?

The respective parties’ lawyers will attend to the formal exchanging of contracts and will complete the contract with the dates and deposit amount, however, you will need to provide authority to exchange and confirm the agreed sale/purchase price and completion date on the day of that exchange is due to take place, just to make sure that you haven’t changed your mind (unlikely I know!).?Please make sure that you are available on the day to speak to your lawyer.

Usually exchange takes place once all the information has come together and everyone in the chain is ready.?It is unusual to set an exchange date unless a deadline has been set, however it is of course possible to exchange before the deadline if everyone is ready at the same time.

The completion date can be the same day as exchange (a Simultaneous) or another agreed date there is no set period of time between exchange and completion but the longer the period of time the more time is available to prepare for completion.

Completion is the day when the property is legally transferred and the balance of money paid.

Keely Warne

Conveyancing Director - Licensed Conveyancer