Understanding the Process of Exchanging on a House

To exchange on a house refers to the legal process where the buyer and seller enter into a binding contract to purchase and sell a property. This is the moment in the property transaction process where both parties agree to proceed with the sale under the terms outlined in the contract; after this stage, it becomes tricky and expensive to back out of the purchase/sale.

When you’re ready to exchange contracts it means:

• • Both sets of solicitors (buyer and seller) are satisfied with the terms of the contract

• • A price has been agreed between buyer and seller

• • Both sets of solicitors hold a signed version of the contracts

• • The seller’s solicitor also holds a signed ‘transfer of title deed’ known as a TR1 form

• • The buyer’s solicitor is looking after the cleared deposit funds, and a mortgage offer (if required) and buildings insurance policy

• • A date for completion has been agreed by both parties

At this point both solicitors will speak to each other – usually over the phone – to confirm they have all the relevant legal documents needed. They then ‘exchange’ contracts over the phone and the transaction becomes legally binding for both the seller and buyer.

On the agreed-upon completion date, the remaining balance of the purchase price is transferred from the buyer (or their mortgage provider) to the seller and ownership of the property officially changes hands.

For buyers, this is the exciting moment they receive the keys to their new home.

Sellers must ensure that the property is vacated on time and in the agreed-upon condition for handover. Moving day can be hectic, but careful planning and organisation can help make the process smoother.

Once the sale has completed the buyer is liable to pay any stamp duty land tax (SDLT) due to the HMRC – this is usually handled by their solicitor, and they will usually also register the buyer’s ownership with the Land Registry. But it is the buyer’s responsibility to make sure the money is paid and ownership is registered.

The actual process of exchanging can be done in a few hours and is mostly handled by your solicitors. Each party’s solicitor will review the contracts for their client – often this is done by a recorded phone call where both legal firms read the contracts allowed to ensure they are identical. Once they are happy, the buyer signs their contract and pays their deposit, and they then instruct the solicitor to exchange contracts with the seller’s solicitor. Learn more by reading our dedicated guide on How Long Does It Take to Exchange Contracts.

Yes. The solicitor will tell you the planned exchange date in advance. They’ll only fix this date once they’re satisfied with the answers received to all the local search, legal title and contract queries they have. They know the importance of this part of the process and will guide their client (whether that is the buyer or seller) through the process.

Lots of things can delay proceedings. Some of them are in the control of the buyer or seller, and some aren’t! Your solicitor won’t recommend exchanging until they all they have satisfactory responses to all the queries they have raised. If the property you are buying/selling is a leasehold this can take more time, and if it is non-standard construction this can add to the number of queries they raise.

Land Registry has been struggling to respond to the volume of local search requests being raised, which means it can take months to get all the answers they need regarding the legal title of a property.

Sometimes it is the buyer or seller themselves who slow the process – either accidentally or deliberately. They might not have provided requested information to their solicitor, or they might be struggling to put finance in place to buy the property.

If the buyer is using a mortgage to buy the property, then they are at the mercy of their mortgage lender. And if they are borrowing a lot of money (a high loan-to-value (LTV)), or the lender views the property they are buying as “riskier” this can all slow down the contract process.

When you exchange contracts you pay an exchange deposit – usually 10% of the property price. This is often called the ‘point of no return’ because if the buyer backs out of the process after this time, they will lose that money and the seller is legally allowed to keep it. The money stays with the seller’s solicitor until the transaction is concluded.

Once both parties have signed their contracts, the buyer becomes legally bound to purchase the property. Legally, the seller still owns the property until completion day, but the buyer is obliged to make sure the property is insured. The seller can agree to give the buyer access to the property for survey work, but this should be supervised and they should never give the buyer the keys to the property prior to completion of the sale.

It is the seller’s responsibility to inform the buyer if there has been any damage, but it is the buyer’s responsibility to make sure the property is insured from the date contracts are exchanged. The buyer should then arrange to have any repairs carried out, and then claim on their insurance.

Usually, buyers and sellers agree to wait 1 to 2 weeks between exchange and completion. This lets both parties get properly organised for the move given they’re now legally committed to the transaction. However, in some cases you can exchange and complete on the same day, or agree a date further in the future. The key thing is that both parties are committed and the plans are communicated and agreed.

Whilst not common, things can go wrong, even at this late stage. The buyer might have a delay with their mortgage funds. There might be storm or flood damage to the property. One of the parties might unfortunately die. This can be very stressful for all parties involved, and its where your solicitor will step in. The solicitor will serve a notice to complete on the defaulting party requiring them to complete on a new date – usually 1-2 days later to allow the issue to be resolved.

If the buyer fails to complete on the new date, then the seller is entitled to keep the 10% deposit that is paid on exchange, and they can claim damages on top. Please check our dedicated guide on what to do if your home buyer wants to delay completion.

If the seller fails to complete, the buyer gets their deposit back and can charge daily interest for the period of delay between initial and revised completion dates.

A seller should never give up the keys to their property until the day of completion, and only after all funds have been paid. If a buyer wants access to the property for any reason before then, it should always be pre-arranged and supervised.