Exchanging Contracts when Buying a House
Buying a house is a lifetime investment, and you will probably want to make sure it's done correctly. When an offer on a property is accepted, you will have to wait until the contracts are exchanged to be guaranteed ownership of the property. If you've never bought a house or you've never been involved in such a transaction, you can seek help from a friend or hire an expert to do it for you or guide you through the process.
Exchanging Contracts
This is done when two legal firms that represent a buyer and a seller swap signed contracts, and the buyer pays a deposit. When contracts are exchanged, the agreement between a buyer and a seller to buy a property becomes legally binding. This means that no one (seller or buyer) can back out from the deal because there are written documents that have been signed by both parties.
- You sign the contract claiming that you will become the legal owner of the house
- The seller of the house signs his/her own copy and then passes it to the solicitor
- The solicitors swap the contracts
- You (the buyer) and the seller sign again to finalise the process
- After both of you have signed, you cannot back out from the deal. If you do, you will forfeit the deposit you paid to the seller
The entire process takes a few weeks (mostly three) because the two parties have to meet and exchange legal documents. After you've paid your mortgage deposit, your mortgage lender will advise you to get a home insurance policy. The insurance policy is not a legal requirement, but you need to have it because most lenders will not let you have a mortgage until you insure the house. You have the right to shop around for the best deal rather than taking out an insurance policy from your lender. Therefore, take your time to research and find the best insurance company in your area.
How do I Exchange Contracts?
Exchanging contracts is done by solicitors/conveyancers from both sides reading out the contracts over the phone. The conversation is recorded for future use and to make sure that the contracts are identical. If you want to be involved in the exchange process, your solicitor or conveyancer can involve you by sharing the recorded call.
However, the solicitor will only release the recorded call when all of the other party involved agrees. This means that the entire process can be delayed by one party or a single person because if he/she has not given the go ahead, the solicitor cannot share the information or continue with the process.
Once the contracts have been exchanged, you have the legal right to own the property. If you pull out, you can be prosecuted and lose your deposit. On the other hand, if the seller fails to honour their end of the bargain, you can keep their deposit and sue them as well.
Explore more:
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Buying a property with a Partner or Friend
Are you looking for an Independent Chartered Surveyor near Maidstone? Follow this link for homebuyer Surveys in Kent.