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Jargon buster: ‘Everyone keeps referring to ‘Exchange’ and ‘Completion’ – but what does it mean?’

Posted on October 7th 2020

If you are selling or buying a property you will be asked by your solicitor when would you like to complete and if you are happy to exchange. But what is the difference, and what does this actually mean for you?

Exchange:

Throughout the conveyancing process neither party is legally bound to continue with the transaction until exchange takes place.

At exchange both parties solicitors confirm the contents of the contract including the completion date. Once the exchange has taken place, the contract becomes legally binding and this includes the completion date. If for any reason completion cannot take place, then the defaulting party will be liable for 10% of the purchase price and any interest incurred. As such we would not advise exchanging until all requirements for completion have been satisfied.

Completion:

Completion is the day in which monies are exchanged between solicitors, keys are released to the buyers, the change in ownership becomes legally effective and you physically move to/from the property.

Completion is confirmed once the seller’s solicitors receive the purchase funds. We are therefore unable to confirm what time of the day completion will take place, as this is dependent on the banking system.

How long between exchange and completion:

Exchange can take place at any time in the run-up to completion. Exchange and completion can even take place on the same day if required, also known as a simultaneous exchange and completion.

The benefit of a longer gap between exchange and completion is that it gives parties the time to book removals, serve notice in rented accommodation, arrange the transfer of utilities etc, with the knowledge that completion will be on the set date.

Currently, due to the changing Covid-19 requirements, a shorter gap between exchange and completion may be more suitable.

Completion on notice:

In some cases, an exchange may be done with ‘completion on notice’. This means a completion date is not specified, but that the seller will serve notice on the buyer when he is ready to complete. It is usual for there to be two weeks between notice being served and completion.

A completion on notice is usually only suitable for new-build purchases, where the property is not fully built.

If you are considering moving house or purchasing your first home, please contact us on 01244 312306 or email law@oliverandco.co.uk for more information.

Call and speak to a lawyer on 01244 312306