When purchasing or selling a home, conveyancing is required for an official transaction of property between buyers and sellers. Once the conveyancing process is complete, an exchange contract will be drawn up to be signed by all parties. Once signed the document and transaction becomes legally binding and the exchange must be completed. In order to prepare for this occasion, conveyancing solicitors will create a draft contract. In this article, discover what you should expect throughout your conveyancing experience and what influence a draft conveyancing contract will have on your purchase or sale.
Conveyancing is the legal process of transferring ownership of a property from one person to another. The conveyancing process begins when you first put in an offer or purchase on a property and ends when you’ve completed the transaction and own the new home! Throughout the procedure, there are several legal processes that need to occur. For efficient completion of your property sale, a professional conveyancing solicitor can be highly useful. Working alongside a licensed individual who has a firm grasp on the transaction will offer peace of mind throughout your moving experience.
What is a draft contract?
A draft contract is the first version of a legal contract for a property sale. The draft contract is important because it contains a basic overview of the terms and conditions to which you will agree to the purchase of your property. This will include details such as price, deposit and any other agreements you may have with the seller.
The purpose of the draft contract is not to act as a legal document, but to present a basic draft of the final contract to be completed on the exchange of contracts. It is not until the official contract is drawn up and signed that the transaction becomes legally binding.
Conveyancing Contract Timeline
Draft contracts tend to be drawn up fairly early during the conveyancing procedure to ensure that all parties are in agreement with the basic terms of the transaction. The following timeline represents the typical completion of a property exchange.
- After placing or accepting an offer on a property, you should instruct your conveyancing solicitor to begin the process. Each party should also ensure their finances are in order for the completion of the purchase.
- The estate agent will exchange contact details between your solicitor and those of your buyer or seller. Initial contact will be made between the two to arrange for the production of the draft contract.
- A draft contract will be produced based on the mutual agreements of both parties. Details of the basic requirements of the transaction are included. This will cover the initially agreed price for the property and details such as the property deeds.
- Once the draft contract is received, your solicitor will arrange certain pre-contract enquiries. These are an essential part of the conveyancing process. These may include local searches, confirmation on your mortgage and any planning permissions required for your building project. The results of these searches could influence the details included in the original draft contract.
- You should receive confirmation of your mortgage arrangements from your specified lender. These details should be passed on to your solicitor.
- Once the details and confirmations of the property transactions are confirmed, an official exchange contract can be drawn up and signed by both parties. This document will differ from the first draft document as the details of any negotiations or the results of certain conveyancing searches will also be included.
- At this point, the transaction becomes legally binding. Your solicitor will make arrangements for the successful completion of your exchange.
*Please note: The above timeline does not cover every single step in the conveyancing procedure. If you would like more information on what happens once contracts are exchanged please click here.
Differences between a draft contract and an exchange contract
A draft contract is a basic overview of the terms and conditions to which you will agree during your exchange. It does not take into consideration information such as conveyancing searches or the results of any negotiations between parties
An exchange contract, on the other hand, includes important information that has been agreed upon from both sides. This will include details of financial arrangements and the results of any conveyancing searches. Once signed, the agreement is legally binding for both parties.
If you are in the process of buying or selling a home, it is important that you understand the difference between a draft and an exchange contract. A draft contract should not be confused with an exchange contract, which contains detailed terms agreed upon by both parties. Make sure to speak to your solicitor if you have any questions about this topic or other legal matters related to residential purchases. If you require an instant online conveyancing quote to see how much it would be we can help.