What is a Simultaneous Exchange & Completion?
Generally in a conveyancing transaction you have time between exchange and completion to organise your move. If you exchange and complete simultaneously, it all happens on the same day. A contract does not become binding until it has been exchanged so exchanging and completing on the day you want to move creates uncertainty.
Why does this happen?
Delay may be caused in the chain if a Lender has not released mortgage funds, the conveyancer does not hold signed contract documentation or deposit, the file has not been signed off by a senior member of staff, or where separate solicitors are dealing with a linked sale and purchase.
Sometimes the buyer and seller simply agree completion dates with each other without discussing the date with their conveyancer, not realising what is outstanding or what is still left to do.
If you exchange contracts and complete simultaneously, you will not be able to exchange until the actual day you are due to move. This means you may have already paid for your removals or you have already packed up your homes and you and your belongings are sat in your removal van awaiting your keys. You will be waiting to hear whether you will complete, making numerous calls to your conveyancer and estate agents. Your removal company may also charge you more if you do not move until later in the day.
A simultaneous exchange and completion may work if you are a buy to let investor or if you are a first time buyer and you do not need to move in the same day you get your keys.
Risk of a simultaneous exchange
If you exchange contracts and complete simultaneously, there will be extra stress, turmoil and inconvenience. You will be waking up and packing up not knowing if you are moving on that day. There will be no certainty, and if funds are not received promptly, there is no guarantee that completion is going to happen as conveyancers will be reluctant to exchange contracts until they are certain that completion will take place and there is no risk to their client. Even worse the seller could still pull out on the day or ask you to pay more for the property.
If exchange and completion does not happen on the day you will be unable to claim compensation, you will lose money on your removals or van rental, and you and any family helpers may not be able to take time off work to move the next day or even worse after the weekend. The seller will also not know whether it is happening that day so may delay moving out or cleaning the property. The seller may be unable to clear the property in time and you may be left with an untidy new home. If you decide to risk a simultaneous exchange and completion you need to consider the financial and emotional impact this will have.
If you have a long chain even if your conveyancer exchanges early in the morning it will take time for the monies to pass to each conveyancer’s bank. The bottom of the chain may get moved but if you are further down the chain the bank may not be able to transfer the money in time for your transaction to take place that day. The Conveyancer’s cashier may have a cut off time for completions and therefore cannot send the money to purchase your new home. If completion does not happen that day, your lender may request the return of the mortgage funds and there may be a delay before funds can be requested again.
You may need to complete your sale and hand over your keys without being able to move into your new property. Or it could be after 4 p.m. before you get your keys and you will be moving in the dark having waited around all day. This not an ideal way to move to your dream home.
Best way to proceed…
Avoid a simultaneous exchange of contracts and completion and avoid the uncertainty.
Exchange contracts in advance with at least 5 working days before completion so you can organise your removals, insurance, inform utilities and family helpers. Your conveyancer will be able to give your Lender enough notice for release of mortgage funds. This will make your moving day less stressful and more enjoyable.
All clients have busy personal lives and being prepared allows you to organise your work commitments, make arrangements for children and pets, and to get family and friends to help, especially if you are elderly or in ill health.
Finally, try to consider other parties in the chain, don’t be selfish, all the parties are aiming for the same goal. Everyone wants to be in their new home as quickly as possible. Agreeing a completion date always involves a compromise but is does not mean that you have to leave yourself vulnerable and risk making yourself homeless.