As a professional, I am pleased to present an article on ”what does exchange of contracts mean”. This is a common phrase used in the real estate industry, and it is important for both buyers and sellers to understand what it means and its significance.
Exchange of contracts is a legal process that takes place towards the end of the home buying and selling process. It is when the buyer and seller each sign and exchange copies of the contract that outlines the terms of the sale. This includes the sale price, deposit amount, completion date, and any other conditions agreed upon by both parties.
Once the contracts have been exchanged, the sale becomes legally binding and both parties are committed to completing the transaction. This means that if either party tries to back out of the sale after exchange of contracts, they can face legal consequences. The deposit paid by the buyer is held by the seller`s solicitor until completion, and will be forfeited if the buyer fails to complete the transaction.
The completion date is typically agreed upon at the time of exchange of contracts, and is usually a few weeks after the exchange takes place. This is when the remaining balance of the purchase price is paid, and the property officially changes ownership.
It is important to note that exchange of contracts is not the same as completion. While exchange of contracts is a key step in the process, the sale is not final until completion takes place and the keys to the property are handed over to the buyer.
In summary, exchange of contracts is a crucial step in the home buying and selling process. It is when the buyer and seller legally commit to the terms outlined in the contract, and failure to complete the transaction can result in legal consequences. It is important for both parties to understand the significance of exchange of contracts and to ensure that all terms are agreed upon before proceeding with the sale.