If you are moving house, you may be wondering if it is possible to exchange contracts on the same day that you complete your sale or purchase.
When you buy or sell a property, it is normal to exchange contracts a week or more in advance. This gives your solicitor time to carry out the final legal checks and order your mortgage advance if you are buying a property. On exchange of contracts the buyer pays a deposit to the seller of 10%. The completion date is set and following exchange you can book your removals.
Occasionally, you may be asked to exchange and complete on the same day. While this is possible, there are some risks that you need to be aware of.
When contracts are exchanged, everyone in the chain is legally bound to complete on the date that has been set. Without exchange of contracts, there is no guarantee that completion will go ahead.
If you are attempting to exchange and complete on the same day, everyone in the chain will need to prepare as though completion will take place, carrying out the necessary checks in advance and ensuring that the mortgage advance and purchase money are available and ready to be sent.
On the morning of the potential completion date, contracts will be exchanged before any money is sent.
Risks of exchanging and completing on the same day
Because there is no legally binding contract in place, there is an increased risk that completion will not happen. This is particularly problematic if you have ordered removals and packed everything ready to go. You will also be required to pay costs relating to your mortgage advance, which will have to be returned to the lender.
If there has not been any exchange of contracts, you will not be entitled to any compensation for your financial losses.
When the transaction does go ahead, you will need to re-request your mortgage advance. It usually takes a lender a number of days to process a request, so you may need to wait until they are ready.
There is also a risk that the other side or another party in the chain could pull out completely or that a seller could use the situation to try and extract a higher price.
For these reasons, it is rarely advisable to exchange and complete on the same day. Exceptions might be if you are buying an investment property for cash and do not need to pack up your house to move.
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If you would like to speak to one of our expert property lawyers, ring us on 0333 3055 189 or email us at info@lpropertylawyers.co.uk
