What is Exchange of Contracts?
There are several things to consider when buying or selling a property. One of the key points to reckon with is the exchange of contracts. Exchange of contracts is the process wherein both the buyer and the seller of the property settle the agreement by signing a legal document (contract) to complete the purchase. After signing, both parties exchange the contracts through their respective solicitors/lawyers. That’s the time when the deal becomes official.
Why is Exchange of Contracts Essential?
Unless the deal is not legally binding, either of the party may still withdraw from the agreement as they do not have any legal obligation yet. This may cause some problems along the way. With the fulfillment of exchange of contracts, there is an assurance that the deal will push through regardless of what the future circumstances may be. Moreover, backing out from the agreement all of a sudden can lead to a serious consequence. This includes paying a heavy penalty. By all means, neither of the party will agree that paying a crazy amount of money for not committing to the agreement is the best idea.
Things to consider Before Exchanging Contracts
Although this process is crucial to satisfy the agreement, there are things to consider first to avoid any hassles on the process. What are the things to consider when you are the buyer?
– Make sure the offer (for example the fixtures or fittings) includes benefits
– All relevant searches have been completed
– Make sure you have enough budget for the mortgage deposit
– There should be a building insurance to insure your property in case of damage
– Consult your lawyer about the terms and conditions pertaining to the contract
– There should be an agreement on the date of completion of sale
– Make sure all the necessary documents are complete
What Happens After the Exchange of Contracts?
After the exchange of contracts, the date of completion of sale is also fulfilled. This means that the owner/seller must turn over the keys and that the buyer is already legally entitled to move in. Likewise, it is the responsibility of the buyer to pay the remaining amount of money for the purchase. As for the seller, they have to make sure to vacate the property. They should alsoremove all of their belongings on the day of completion.
The process of completing the legal purchase can be stressful whether you are the buyer or the seller. Hence, taking into consideration all the necessary steps for the completion is indeed important. By doing so, both parties can ensure that taking these important steps will save them from hassles. It will also provide them a promising transaction.