The process of buying or selling a property can be complicated and confusing, with several legal requirements and steps that need to be followed. Two important stages in this process are the exchange of contracts and completion. While these terms may sound similar, they actually refer to two distinct stages of the property transaction process. In this article, we will explore the difference between exchange of contracts and completion.
Exchange of Contracts
The exchange of contracts is a crucial stage in the property transaction process. It is the point at which the buyer and seller become legally bound to complete the transaction. This involves the exchange of signed copies of the contract, with each party receiving a copy of the other`s signed contract.
Once the contracts have been exchanged, the terms of the contract become legally binding and both parties must continue with the transaction. The buyer is required to pay a deposit, usually around 10% of the purchase price, which is held in a special account until completion. If the buyer fails to complete the transaction, they will lose their deposit, and the seller can take legal action to enforce the contract.
It is important to note that until the contracts are exchanged, either party can withdraw from the transaction without any penalty.
Completion
Completion is the final stage of the property transaction process. It is the point at which the buyer takes possession of the property and pays the remaining balance of the purchase price, as well as any additional costs, such as legal fees and stamp duty.
Once the purchase price has been paid, the seller must vacate the property and hand over the keys to the buyer. The completion date is agreed upon at the time of the exchange of contracts and is usually a few weeks after the exchange date, giving both parties time to finalize their preparations.
After completion, the buyer becomes the legal owner of the property and is responsible for all associated costs, such as property taxes, insurance, and maintenance.
In Conclusion
In summary, while the exchange of contracts and completion are both important stages in the property transaction process, they refer to distinct stages. The exchange of contracts is the point at which both parties become legally bound to complete the transaction, while completion is the final stage, at which the buyer takes possession of the property and pays the remaining balance of the purchase price. Understanding the difference between these two stages is crucial for anyone involved in a property transaction.