When buying a house, the legal team may use many professional "jargon" terms, which may confuse you. We will clarify two very common phrases that you will hear and you should expect to hear: exchange and completion.

Exchange and completion

What is exchange?

  Exchange is an exchange of contracts. Exchange of contracts is the moment when property transactions are legally binding. Both parties have a contractual obligation to complete the sale/purchase on the agreed completion date. Once the buyer's property transfer lawyer is satisfied with all the information provided by the seller's property transfer lawyer, and all lawyers hold the signed contract on file, the exchange can proceed. All parties in the chain also need to agree on a completion date.The buyer’s lawyer also needs to receive a mortgage offer (if the buyer obtains a mortgage to fund the purchase) and ensure that all mortgage conditions are met. They must also be satisfied with the results of the property search. The buyer will be required to provide a deposit and will be sent to the seller’s lawyer when the contract is exchanged.

Nowadays, exchange is mainly carried out by telephone. Both lawyers will review the contracts and recite them during the conversation to prove that the contracts are in order.

What is completion?

  Completion means that the property transaction is legally finalized and the new owner obtains the key. It happened on the date specified when the contract was exchanged. Completion is the final stage of a property sale and purchase transaction. This happens when the seller’s lawyer confirms that they have received the full purchase price. Through the date and transfer of the title document, the ownership is transferred from the seller to the buyer. Unless otherwise agreed, the vacant ownership shall be handed over to the buyer before 1 pm. The seller should leave the property before 1 pm on the completion date. The buyer usually has the key provided by the sales agent and can move in freely.

  Completion usually takes place on Friday, so buyers have the entire weekend to settle their new property. However, in order to avoid possible delays on Friday, it is becoming more and more common to complete earlier this week because Friday is the busiest day for bank transfers.

Difference between exchange and completion

  The main difference between exchange and completion is that "exchange" is a contractual exchange that makes the buyer and seller legally binding, while "completion" is the date when both parties actually move and transfer the legal ownership of the property. If you want to sell or buy a house, the transaction will not be legally binding on either party until the contract is exchanged. Before the contract is exchanged, the legal representative designated by the buyer and the seller needs to undertake a certain amount of work. Either party can withdraw from the transaction before the exchange. 

How long between exchange and completion

  The length of time between exchange and completion is agreed by all parties, but it is usually one or two weeks.

  This gives everyone time to organize themselves to complete:

  Buyers and sellers can confirm removal and start packaging.

  All parties can arrange the transfer of services and utilities, as well as the redirection of mail.

  Have time to withdraw any mortgages needed.

  Not always 14 days

  Sometimes the exchange and completion happen on the same day, and sometimes there may be an interval of one or two months (or even longer).

  If someone is currently in a rented residence and requires two months’ notice, the most common situation is a longer interval, and they will not be advised to do so until the exchange occurs.

  If you are buying a new building, there may be a longer delay because the property may not have been completed when you exchange.

  If the seller of the property you purchased has not ensured to continue buying, you can also agree to a delay in completion date.

  One thing to note is the maturity of mortgage loans, which are usually valid for three to six months.

  Therefore, if you receive a mortgage quote early in the process and it takes several months to exchange, your completion period may be determined by the mortgage lender, otherwise you will have to reapply, which may delay every time Personal process.

How to exchange contracts?

  Once you are at the stage of exchanging contracts, you may not have much to do. The contract exchange will be handled by your lawyer, usually in the form of phone recordings, and both law firms will read the contract aloud to make sure they are the same. Once this stage is processed, the contract will be issued to another lawyer to complete the exchange.

  At this stage, you can start preparing a list of contacts who need to notify you of moving.

What happens after the contract is exchanged?

  After the contract is exchanged, your completion date is almost the same, and you can start preparing for the move. Now you can start processing the address change list, send your title deed to your lender, and register the transfer of ownership in the land registry.

What will happen on completion day?

  Also known as the moving day, the completion date is the day when money is transferred from the buyer to the seller, the keys are handed over, and the move takes place. Something exciting

  Now that we have explored the ins and outs of exchange and completion, it is time to enter the step-by-step process. We will keep it short, but if you need it, this will provide you with an overview guide for reference:

  Check if everything is normal

  Signing the contract

  Pay the deposit to your lawyer

  Instruct lawyers to exchange contracts

  Preparation is complete (moving, packing, notifying related parties to move)

  The title certificate sent by the buyer's lawyer to the lender

  Final inspection by the lender

  Money is released

  Seller’s lawyer confirms receipt of funds

  Key has been handed in

  Moving time!