A guide to exchanging contracts during the conveyancing process
By z4027672030, Nov 26 2015 09:33AM
When transferring the legal ownership of a residential or a business property from person or entity to another, such as when you are buying or selling your home, this is known as conveyancing. It is well-advised that the conveyancing process is carried out using a licensed conveyancer or a solicitor, in order to ensure it is carried out adequately and to an accepted standard.
While conveyancing also includes other services such as legally-required searches, essentially the exchanging of documents aspect consists of three stages: the pre-exchange of contracts, the exchange of contracts, and completion.
Pre-exchange of contracts
This involves exchanging details between the buyer’s solicitor or conveyancer and the seller’s. During this process, the buyer’s solicitor is provided with a draft contract, also sent to the buyer, which outlines the parties’ details, the property price, fittings included and details of the seller’s title deeds.
Once these terms are agreed by the buyer’s solicitor, checks and Local Authority searches are then also carried out. The buyer’s solicitor will also make a number of enquiries with the seller’s solicitor, for instance, about any possible ongoing property disputes, before the buyer is sent a mortgage deed for their signature, rendering the contract a formal one. Following the signing of this deed, both buyer and seller agree a completion date, the date when the buyer is allowed to move into the property.
Exchange of contracts
The buyer is only legally bound to buy the property after the contacts have been exchanged, and following this, the buyer must pay a non-refundable deposit to the seller. Up to this point, both buyer and seller can renegotiate the purchase price, completion date or any other agreed terms, or even withdraw from the transaction without any obligation to compensate.
The buyer’s solicitor will then prepare a transfer document, which is then signed by the buyer, transferring ownership of the property from the seller to the buyer. Once agreed, the deed must be signed by both parties. Following this, the mortgage arrangements are completed, so that the money is ready to be transferred to the seller, while both Land Registry and Stamp Duty fees must also be paid.
Upon completion, the buyer’s solicitor sends the funds to the seller’s solicitor. The buyer then receives the title deeds, transfer deeds and the keys to the property.
Gazumping and gazundering
Gazumping and gazundering are two problems which can occur during the conveyancing process. Gazumping occurs when a buyer makes an accepted offer, only to later lose out to another buyer who has made a higher offer, which can happen at any point before the exchange of contracts. Gazundering is when a buyer reduces their offer right before they reach the exchange of contracts point, forcing the seller the accept the lower price if they wish for the sale to go ahead.
If you’re selling or buying a property and require the help of a conveyancing firm, North Devon solicitors Taylors Solicitors are here to help.