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In England and Wales, Exchange of Contracts is the last stage of the legal process after which you cannot pull out (without losing your deposit and any legal costs you may have incurred).
Unlike in England and Wales, many conveyancing solicitors in Scotland also have an estate agency part to their business.
What happens when contracts are exchanged?
Once all the searches are complete and you’re ready to proceed with the purchase, you’ll be asked to pay a deposit which usually 10% (but sometimes 5%) of the property value before contracts can be exchanged. If the buyer pulls out after this stage, they will lose their deposit and may face legal action from the seller.
Both the buyer and seller will be required to sign copies of identical contracts in order for the sale to become legally binding and for these to then be sent, via recorded delivery, back to the solicitor or conveyancer.
It is essential to have Buildings Insurance cover in place at this stage and buyers should also consider other protection such as Life Insurance.
A date for completion is usually set for at least two weeks after contracts are exchanged, but it can be quicker than this.
Use the time between exchanging contracts and completion to plan your move, including packing your belongings and organising a removals company, if necessary.
TIP: When transferring money to your solicitor or conveyancer, always be careful to check their bank details before sending any money. Scammers have been known to target homebuyers by intercepting emails between them and their solicitors and inserting rogue bank details to unlawfully obtain money.