During the process of buying or selling a property you will hear two important milestones mentioned frequently: exchange and completion.

Both are vital key stages in the conveyancing process but have differing purposes.

Exchange of Contracts

Exchange of contracts is basically when the buyer and seller have signed and their respective solicitor or conveyancer legally “exchanges” their contract documents.

It is only at this point that:

  • The agreement becomes legally binding.
  • A deposit (typically 5–10%) is paid by the buyer.
  • A completion date is fixed - this is the date when the transaction will be finalised.

After exchange, if either party pulls out, they face serious legal and financial consequences, and a buyer could risk losing a 10% deposit for failure to complete.

By way of example, if you exchange contracts on the 20th June with completion on the 27th June, it is from the 20th June that both parties are legally committed. The keys do not change hands until the 27th June.

Completion

Completion is the day when:

  • The remaining funds are transferred from buyer to seller.
  • The buyer receives the keys and can move in.
  • The ownership officially transfers and is later registered by the buyer’s conveyancer or solicitor at the Land Registry.

Completion is the point at which the property changes hands— and the buyer takes over ownership of the property from this date onwards. The seller relinquishes ownership and can no longer access the Property.

Exchange and completion can take place on the same day, and this is called a "simultaneous exchange and completion". This is much riskier to the parties in the chain as there is no guaranteed commitment from a seller and buyer until the very last moment. A long chain would not be agreeable to proceeding in this way due to the risk of losing fees paid to removals and other third parties.

For this reason, a simultaneous exchange and completion is most often seen in chain free sales and purchases.

A question often arises on the time period or gap between exchange and completion and when the exchange day will be.

There is no fixed date upon which exchange of contracts takes place; it happens when all parties are ready, finances are in place, all parties are signed, and the same completion date has been agreed by all buyers and sellers in the chain.

The period between exchange and completion allows for people to:

  • Pack and plan the move
  • Arrange removals and utilities
  • Complete legal and financial checks

Until contracts are exchanged and the completion date is set in the contract, there is always the risk that a party can change its mind to the date everyone else wants. Should this happen then people may lose money paid out to third parties and have to undo the final plans they have made for the move. This invariably causes stress to those in the chain.

Remember:
Exchange is the legal commitment.
Completion is when you get the keys.

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