How long between exchange and completion ? - MCS

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29th January 2021

How long between exchange and completion ?

Over the years, solicitors would meet physically and exchange contracts. But things have changed, and nowadays it’s done by agreeing over the phone. On the exchange day, legal companies contact each other and agree on the deposit of funds and the terms of sale, and the completion date. They will then inform the solicitors, who would convey the message to their clients. The client then needs to confirm the exchange; if it doesn’t confirm, they will be forced to start all over again. The exchange marks the point where the seller and the buyer are required by law to see the transaction to completion.

The completion is the last stage in the property sale. It is only possible if the seller and their team receive the money for the property, and then the property is handed over by the agreed time. The solicitor will then register the buyer’s ownership details with the land registry. Completion shows that responsibility and ownership of the property have been transferred to the buyer.

Completion explained in short

Completion is when a property transaction is legally finalised and the new owners get the keys. It takes place on a date specified at exchange of contracts.

Generally, it takes anything from two to four weeks between exchange and completion

Completion Date Agreement

There are no legal consequences until an exchange occurs. There are some two to four weeks before the exchange and completion where both parties prepare to move. If many parties are involved in the sale, it will take longer to be completed. Because of different schedules and opinions, you might not agree on the first choice; you should compromise. Most people will agree on a Friday because of work and use the weekend for moving and unpacking their belongings. You can start booking moving companies and saying your goodbyes when you have a date.

Although it’s possible to finish the transaction in a single day, the transaction will be stressful. Same-day transactions are common with a cash-only buyer; it is not achievable when a mortgage deal is needed. Unless there is an urgent need for a same day exchange and completion, it’s better to wait for a few days so that no one can rush into a commitment they cannot fulfil.

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Deposit on Exchange

The amount of money the buyer is supposed to deposit in the exchange of contracts is different from the deposit that a mortgage lender requires. The exchange deposit varies from five to ten per cent of the purchase price. If a buyer can confirm the money is available a few days in advance, it may take little time to complete the purchase. The buyer should have an exchange of contracts checklist to know what is needed and when. For the seller, the buyer’s exchange deposit is a way of knowing that the buyer will see the transaction to the end; if they do not, the seller will keep the deposit as compensation. The exchange funds are not accessible until the completion of the contract.

The Duration between the Exchange of Contracts and Completion

The time will depend on what all the other parties have agreed on; it is usually between one or two weeks. But it may differ depending on different unforeseen circumstances; some transaction will even go for months. The most common case that can drag the completion process is when a buyer is staying at a rental house and must give two months’ notice before moving. The buyer cannot put in the notice before the exchange happens for security. It may also take longer if you purchase a new building; there might be some delays depending on the building’s state when the exchange took place. One more thing to beware of is the mortgage; a mortgage offer is usually valid for 3 to 6 months. If the offer expires before the exchange, completion of the contract will be determined by the mortgage lender or reapplication for a new offer which will also delay the process.

On completion day if things move smoothly, it might be over before you know it, but there might be delays as well. Transfer of funds is the main thing that causes delays. The money is sent to the buyer’s solicitor by the lender and then transferred to the seller’s legal company. So if the lender sends the money on time, things will go as planned, a little delay from the lender may delay the completion.

Exchange of Contracts Checklist

There are a few things on the contracts worth knowing to complete the purchase as soon as possible. Keep an eye on the bank details, ask the solicitors for the correct details, and if there are any changes on the bank details, you will be on top of it. That will help in avoiding any delays. Start preparing for moving early; don’t make any commitments before the exchange, but you can start looking for moving companies and even start packing so that immediately the contact goes through you can move easily.

Ensure the buyer gives you all the utility people’s contacts like, cable suppliers, electricity, water, phone and gas to avoid any last-minute rush. Getting the contacts before completion will also help you know who you will keep and who you will change. Check all the metre readings to know if everything is in order, so there are no disputes on completion day. After the entire exchange checklist is done, you can wait for your new house’s keys.

Completion Day Checklist

Have a list of all the things you should do and start working on it as soon as the exchange happens to make sure completion day runs smoothly. Give the moving company enough time to park, and you can get a one-night storage facility near the place you are moving to, this will save you the hustle of getting everything from the old property the morning of completion. Keep all the important documents and personal paperwork that may be needed in a folder that you can carry with you.

Make arrangements on how and where you will pick the keys. After getting the completion statement from your solicitor, make sure you read and understand every detail to avoid any surprises on the last day. Lastly, since many people are involved in the completion process, it is safe to have a plan B if you can’t access the house that day. Get a place you can sleep until the next day.

For the seller, make sure everything you agreed on is the same on completion day. If you were to leave some furniture in the house, do not remove them without informing the buyer. Take care of all the legal requirements before the completion date.

Work On the Property between Exchange and Completion

If the property being sold is vacant and needs some work before it gets to the standard the buyer wants it to be; building work can be done between exchanging contracts and the completion date. Another instance is where the lender holds back mortgage funds until some work is done on the property. In such a case, allowing the seller to work on the stated areas might be the only way to sell the property. You can do building work through a legal document called key undertaking, which states what kind of work will be done on the property.

Why Is There A Gap Between Exchange And Completion?

Even though it’s not a must to have a gap between exchange and completion; because of the same day completion, the gap allows both parties to get all their documents and affairs in order and enough time to move. The time will also give the buyer time to get all the needed funds ready. The problem of not having the gap is that the buyer might pull out the next day; you will be left high and dry with all your belongings in a van somewhere.

The gap is a good breathing space where both parties can recollect all their thoughts, and if there are any second thoughts and one pulls out, there is no much damage done. Completing the sale on the same day means you will skip the exchange of contracts, which is a legally binding document. The exchange gives the seller and buyer peace of mind, knowing that neither of them will be pulling out of the deal without consequences. Why is there a gap between exchange and completion? It is time for both parties to finalise the purchase without any future problems; they have time to get everything in order before completion.

How to Avoid Delays

To speed up the process between exchange and completion, both parties should respond as quickly as possible when they are called. If there is any document or information needed, they should have them in hand to deliver whenever requested. They also need to be open and transparent throughout the transaction. If the mortgage offer has expired or the house is not in the standard condition to be sold, they need to be open and communicate that; unnecessary lies can drag the completion for no reason.

The seller and buyer should maintain communications throughout the process; talking will help identify any problems early. It’s important to agree on the completion date faster so that everyone gets enough time to sort out moving arrangements. Keep in touch with the agent so that he or she can be available when needed. Finally, when choosing the completion date, you should avoid holidays or days that most people move; you will need ample time to finalise the completion process and move.

Conclusion

There is no specific timeframe between exchange and completion. It can go from months to a few weeks or even just a day. Until the contracts are exchanged, there will be no date for completion set. The faster the seller and buyer exchange contracts, the sooner they will be able to complete the transaction. Allow enough time for both parties to arrange everything needed, rushing to completion may cause even longer delays; you may miss some details along the way.

Deal with all the things that may delay the transaction early, waiting for the last minute may result in extending the completion date. Choose the best day of the week as the completion date. Fridays are the most popular for moving; this means financial institutions and moving companies are busiest on Fridays. If you want to stick to the completion date, you might want to consider other days in the week where there won’t be any delays. Some challenges come between exchange and completion that you should note, for example, redirection of funds has become a threat, especially with online fraudsters.

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