Until exchange, everything in a sale can still change. At exchange, it stops being able to. When you’re being pushed to exchange, the only question that matters is whether you’re ready: speed is good, but signing before you’re ready is not.
What happens at exchange
When both sides are happy with the contract, you each sign final copies and your conveyancers exchange them. GOV.UK: “The agreement to sell and buy is then legally binding. Usually, neither of you can pull out at this point without paying compensation.” A completion date is fixed at the same time, agreed across the whole chain.
What buyers commit to
- A deposit, often 10% of the purchase price, but it can vary (Citizens Advice). It is held by the seller’s solicitor until completion.
- Buying the home on the completion date. A buyer who drops out after exchange is likely to lose that deposit (Citizens Advice).
- Responsibility for the property from exchange, so your buildings insurance should start that day (Citizens Advice).
What sellers commit to
- Completing on the agreed date and leaving the property in the state agreed in the contract.
- Staying in the deal. The government’s How to sell a home guide says a seller who withdraws after exchange may be liable for breach of contract, the buyer’s costs and even compensation.
- A deposit plan that works, if you are using your buyer’s deposit towards your own purchase: check your seller will accept a reduced deposit if you need one.
Can anyone pull out after exchange?
Only at a cost. After exchange, what happens if either side can’t or won’t complete depends on the contract, and it can be expensive. If you have exchanged and someone wants to pull out, whether it’s you or the other side, speak to a solicitor about your own position.
Before you exchange
Ask your conveyancer one question and get the answer in writing: is anything outstanding that you would normally want before exchange, on either side? Then check the essentials yourself:
- Buyers: search results back and explained; the survey read and any further investigations done; enquiries answered; a mortgage offer issued that covers the price and won’t expire before completion; the deposit and the completion balance ready, including Stamp Duty Land Tax in England or Land Transaction Tax in Wales; buildings insurance booked from exchange.
- Sellers: all enquiries answered and your answers checked; the TA6, TA10 (and TA7 if leasehold) forms accurate, including anything that has changed; a mortgage redemption statement and any early repayment charge known; the agent’s fee and the conveyancer’s bill known.
- Both: the completion date agreed by every link in the chain; if you are selling and buying, both exchanges at the same time; and bank details confirmed by phone, on a number you already trust.
Pressure to exchange: red flags
- “Exchange today or the chain collapses.” Ask your conveyancer what is outstanding and what the risk of going without it is.
- “The survey or searches can wait.” They protect the buyer. Once you exchange, the problems they would have found are yours.
- “The mortgage offer is coming.” A buyer shouldn’t exchange without a mortgage offer in place that covers the price.
- “Your next purchase will catch up.” If you are selling and buying, exchange both at the same time, or be sure you could live with owning two homes, or none.
- “Just send the deposit to this account.” A classic fraud pattern. GOV.UK warns there is a risk of fraud when large sums move: check you are dealing with the person you think you are, and send money only to the correct account, confirmed by phone on a number you trust. HM Land Registry’s free Property Alert can email you about activity on a title.
Between exchange and completion
Sellers should tell the energy and phone companies they are leaving, arrange final meter readings for completion day and tell the council tax office (Citizens Advice). A buyer may want to visit to measure up, but don’t allow any work before completion. On the day, completion and key handover often happen around lunchtime, and delays can happen when many people in a chain complete on the same day (MHCLG), so plan with that in mind.