Exchange of Contracts

Exchange of contracts is the point at which a property transaction becomes legally binding. Prior to exchange, either party can withdraw without legal liability (though wasted costs may arise). After exchange, withdrawal is a breach of contract with significant financial consequences.

At exchange, the buyer's solicitor and vendor's solicitor simultaneously confirm the agreed contract terms, the buyer pays a deposit (typically 10% of the purchase price) held by the vendor's solicitor, and a completion date is fixed.

If the buyer withdraws after exchange, they lose their deposit. If the vendor withdraws, they must return the deposit and may be liable for the buyer's additional costs and losses.

For auction purchases, exchange occurs at the moment the hammer falls. The contract is signed and the deposit (usually 10%) is paid immediately. This is why auction bidders must have their legal and financial preparation complete before bidding.

The period between exchange and completion is typically 2-4 weeks, during which the buyer's solicitor prepares and submits the transfer of ownership documents and makes final arrangements for the completion funds.