Up until the point of exchanging contracts, neither party is legally obliged to buy or sell the property. Either party can pull out without facing a penalty. It is therefore necessary to exchange contracts to stop buyers or sellers from pulling out of the transaction at the last minute, causing a breakdown of the chain.

Contracts can be exchanged at any point once all parties are ready. Exchange typically takes place a week or so before completion, although exchange can take place on the day of completion. It is important to ensure that everything is in order before exchanging contracts. Contracts should only be exchanged when:

• Title to the property has been examined and is without defect.
• A survey has been carried out and issues of concern have been dealt with. 
• A mortgage offer has been received and all lender conditions have been satisfied.
• Agreement has been reached for the purchase of additional items of furniture.
• Funding has been arranged for the balance of the purchase price.
• All relevant searches have been completed and there are no issues of concern.
• You have building insurance in place. You are liable for the property as soon as the contracts have been exchanged, so it is essential that you are covered from the point of exchange.
• You have received a report detailing the results of searches and title examination  and have signed all necessary paperwork.
• You have reached an agreement on a completion date.

Once all of the above has been completed, your solicitor will exchange contracts for you. This will typically be midday Monday to Friday.

The process of exchanging contracts is completed by the buyer and the sellers’ solicitors, agreeing the contents of the contract by phone. Each party’s details, property details, deposit and completion date are agreed to ensure that the contracts are identical. The signed contracts are then sent from each legal team to the other in the post.

Contracts can only be exchanged when everyone in the chain is ready. 

Once the contracts have been exchanged, you are legally obliged to buy or sell the property on the completion date agreed. If you back out after this, you will be in breach of contract, forfeit your deposit and may also face being sued by the other party for losses caused by the failure to complete.

After you have exchanged contracts the next stage is completion – this is when you get the keys to the property and can move in.

Before the day of completion:

• It is recommended that you visit the property to ensure that all the fixtures and fittings that were agreed on are intact and that nothing has been damaged.
• You should arrange to have post redirected to your new address.
• Arrange removals.

On the day of completion:

• You will receive a call from your solicitor letting you know that completion has taken place and keys can be collected from the estate agents.
• You should take meter readings and notify utility companies of the change in ownership.

Following completion :

• Your solicitor will register the transfer of ownership with Land Registry.
• Your solicitor will notify the freeholder of the change in ownership if the property is leasehold.