Buying and selling a property can feel complex, particularly when it comes to understanding key stages in the conveyancing process. One term that often causes confusion is simultaneous exchange and completion.
In a standard UK property transaction, exchange of contracts and completion usually take place days or even weeks apart. However, in some circumstances, both steps can happen on the same day. Whilst this approach can speed up the process, it also introduces unique risks and considerations for buyers and sellers alike.
In my blog, I explain what simultaneous exchange and completion means, why it happens, and what you need to be aware of before proceeding.
What is a Simultaneous Exchange and Completion?
All conveyancing transactions require an exchange and completion.
Exchange of contracts is when the contracts become legally binding and the completion date is fixed. Completion is when you can collect the keys to the property, usually from the estate agent or, when there is no selling agent, direct from the seller.
After exchange of contracts, none of the parties in the chain can withdraw from the transaction or change the completion date between the period of exchange until completion without financial penalties for breach of contract.
In a typical conveyancing transaction, exchange of contracts happens prior to completion and this can be days or weeks before completions depending on the requirements of the chain, although it is becoming more common to exchange with less time in between, usually 1-2 days.
You may have heard your conveyancer refer to a simultaneous exchange and completion, or “sim”. This is when both exchange of contracts and completion happen at the same time, on completion day and there is no time between exchange and completion.
Why would exchange and completion happen on the same day?
There can be advantages, and disadvantages, however this depends on whether you are in a chain, purchasing the property as an investment (Buy to Let), are a first time buyer or cash purchaser, or selling with no onward purchase and do not live at the property. A sim would not be appropriate if you are in a chain and you require your sale and purchase to complete on the sale day as you will need to move out of one property and into your new property simultaneously.
When might a Simultaneous Exchange and Completion be suitable?
There are some transactions where it is necessary to exchange and complete on the same day as it is the option which carries the least risk. For example:
- If a person is purchasing a property in their company name and is mortgage funded there are certain checks that must be carried out on the day of completion by the conveyancer at Company's House to ensure the company is still solvent and able to purchase the property. This is required by the lender before mortgage funds can be used.
- If the seller is of poor health and at end of life with a high risk that they may pass away before the completion date. The conveyancer may, in the best interest of their client, require exchange to take place on the same day as completion. This reduces the risk of their client being in breach of contract due to death of the seller.
- This is because if the chain exchange contracts and the seller then died before the completion date, the transaction could not proceed the Court has issued a Grant of Probate appointing the Executors and giving them the legal power to administer the deceased estate and sell the property.
- If there is no chain. You are a cash purchaser or first time buyer buying a property that is vacant.
- If you are a tenant purchasing the house you are living in from your landlord.
Risks of a Simultaneous Exchange and Completion
Chain-Related Delays
Generally if you are in a chain, ie. you are selling and buying at the same time and require moving out of your current home into your new home on the same day, exchanging and completing on the same day is not ideal.
A sim does not provide certainty which is usually required in chain transactions in order that arrangements can be made and removal companies booked. You may need to book time off from work and if you have a young family, you may need to arrange childcare. You may also need help from family and friends who may also need notice to make arrangements to be available.
Lack of Certainty
Until exchange, there is a possibility a party can walk away from the transaction or want to negotiate the sale price. This would significantly delay the transaction and any discussion of dates would need to be postponed. If the property was to go back on the market, you may risk the chain collapsing as other parties may not be prepared to wait and decide to remarket their property.
If the sale price is renegotiated this may have an impact on your purchase as you may need additional funds not budgeted for to complete, and the buyer will need to update their lender and a new mortgage offer will need to be offered.
Financial and Timing Risks
Exchanging and completing on the same day will also delay when funds can start moving through the chain. If the chain is long, there is an increased risk that those parties at the top of the chain may not be able to complete there may be insufficient time to allow the conveyancer to transfer the completion funds on your purchase. Furthermore, you may have completed on your sale but not on your purchase. If this happens, you will need to make alternative arrangements until you can complete on the next working day. Your conveyancer can discuss these options with you should this be necessary.
If you do decide to sim, you should have a contingency plan to consider what will happen if you are not able to complete on either your sale or purchase, or in the unfortunate situation that the sale completes and the purchase does not.
Why Does Simultaneous Exchange and Completion Happen?
Although exchange of contracts and completion usually take place on separate days, there are circumstances where they happen simultaneously. This approach is often used when there is a greater risk that a delay between exchange and completion could cause problems, or where practical considerations make completing both stages on the same day the safest option.
For example, simultaneous exchange and completion may be appropriate for company purchases, where certain checks need to be carried out on the day of completion or where a seller's deteriorating health means there is a significant risk that completion could be delayed if there is a gap between the two stages. It can also arise when unexpected transactional delays occur after a completion date has been agreed. This may include waiting for confirmation from a mortgage lender that funds will be released, the receipt of the buyer's deposit, signed documents being returned, or final internal file approvals, which can sometimes result in additional enquiries needing to be resolved. Once all pre-completion searches have been completed and are clear, proceeding with simultaneous exchange and completion can provide a practical solution that allows the transaction to move forward without further unnecessary delay.
Are There Any Advantages of Simultaneous Exchange and Completion?
If you are not in a chain or require certainty to be able to book removals, a simultaneous exchange and completion may be for you.
Ideally, this would suit a first time buyer when they do not need to move into the property on the day of completion or a seller who does not have a linked purchase and the property is empty.
Mortgage lenders can withdraw their mortgage offers at any time up until they have released funds in readiness for completion. This may be due to change in the borrowers circumstances. Exchanging on the day of completion, once your conveyancer has received funds, reduces this risk and ensures potential issues between exchange and completion.
What Happens on the Day of Simultaneous Exchange and Completion?
Once all parties in the chain confirm they are ready, exchange of contacts can then start. It will follow the same procedure than if you exchanged days before.
Your Conveyancer will contact you to take your authority to exchange, usually early in the morning, so make sure you are available. If you are not, make sure you have advised your Conveyancer an alternative method of communication. You do still need to give your authority to exchange.
Your conveyancer will then exchange contracts.
If you have a related sale, your Conveyancer will offer a release of Contracts to your Sellers Conveyancer. Once all parties in the chain have exchanged money, they can then start moving up the chain to the top.
If you are a First Time Buyer or an investor, with no property to sell, funds will be sent to the Sellers Solicitor;
You will be able to collect the keys to the Property once your Sellers Conveyancer confirms purchase funds have been received. In simple transactions, without any delays on the day, you should be able to collect the keys to the Property around lunchtime. If you are in a chain, this can be late in the day.
How to Reduce Risk When Exchanging and Completing on the Same Day
If a sim is not suitable for you, there are some simple things you can do to reduce the risk of this happening :
- Ensure all documents are signed in advance
- Confirm mortgage funds are ready.
- Ensure your deposit funds are in your account in plenty of time and ready to be transferred to your Conveyancer. If your deposit is an investments, make sure you have allowed sufficient time to release these funds from the provider. Investment Company’s usually need notice to release funds into your account. If you are a First Time Buyer and using LISA or ISA bonus, speak to your Conveyancer who will advise you what you need to do in order for them to draw down your funds in sufficient time.
- Maintain clear communication with your conveyancer
- Have contingency plans in place.
Should You Avoid Simultaneous Exchange and Completion?
When deciding if this is for you, you should always consider the pro’s and con’s and take a balanced view of the risks involved. If the risks are low, then it may be something to consider.
However, you should always take professional advice before making a decision where your Conveyancer will explain the benefits and risks specific to your case. You can then make an informed decision.
Sometimes, it can be unavoidable due to matters outside of your control and an issue occurring within the chain dealing exchange prior to the completion day.
Alternatives to Simultaneous Exchange and Completion
The alternative to a sim is exchanging in traditional format and having a period between when contracts are exchanged and the completion date.
The gap between exchange and completion can be varied and can anything from 24 hours to 1 week / 1 month.
If a sim is not for you, when preparing for exchange of contracts, ensure there is flexibility in the exchange dates. It is not always possible to exchange on the anticipated date. If this is close to completion there is a greater risk your transaction will become a sim.
Simultaneous Exchange & Completion - In Summary
Whether to exchange and complete on the same day or not is part of managing the risk. If there is a known risk that completion may not happen on the agreed date your conveyancer may advise it is the safer option to exchange at the same time as completion.
In other situations, the risk is small and the preferred option is to exchange in advance of the completion date to give the chain certainty. Your conveyancer can advise you better depending on your particular circumstances and the status of the chain.
Key to a successful exchange and completion is maintaining clear communication with your conveyancer. Ask questions if you don't understand something and ensure your conveyancer knows your requirements at the start of the process so that they can manage the chain's expectations.
Consider what notice you need between exchange and completion. Can you move at short notice or do you need time to make arrangements.
If you have any questions, our experienced residential property team would be happy to help, please contact us on freephone 0800 011 6666 or via email at legal@timms-law.com.
Frequently Asked Questions
What is simultaneous exchange and completion?
Simultaneous exchange and completion is when contracts are exchanged and the property purchase or sale completes on the same day. This means the transaction becomes legally binding and ownership transfers within a matter of hours, rather than days or weeks apart.
Why would exchange and completion happen on the same day?
Simultaneous exchange and completion is often used where there are time-sensitive circumstances or where delaying between exchange and completion could create additional risk. It can also help keep a transaction moving when all parties are ready to complete immediately.
Is simultaneous exchange and completion more risky?
It can be. Because exchange and completion happen on the same day, there is less time to resolve unexpected issues if they arise. Delays with mortgage funds, banking systems or legal paperwork can sometimes affect completion, which is why your solicitor will only recommend this approach when they are satisfied it is appropriate.
Can you exchange and complete on the same day with a mortgage?
Yes, it is possible, but your solicitor will need confirmation that your mortgage lender is ready to release the funds in time for completion. Careful coordination between your solicitor, lender and the other parties involved is essential.
How long does simultaneous exchange and completion take?
The legal process leading up to exchange is the same as any other property transaction. The difference is that exchange of contracts and completion both take place on the agreed completion day, with funds transferred and ownership changing once all legal requirements have been met.
Is simultaneous exchange and completion common in conveyancing?
While most property transactions have a gap between exchange and completion, simultaneous exchange and completion is not unusual. It is commonly used where there is no onward chain, where the parties want to complete quickly, or where particular circumstances make a same-day exchange and completion the most practical option
