Whilst there doesn’t have to be a set time between exchange and completion, can you exchange contracts without a completion date?
Do you have to agree a completion date before exchange?
You cannot exchange contracts without a completion date. The completion date in the contract will be a date that both parties to the contract agree. However, it is possible to also include a mechanism in the contract that will trigger a completion date instead of a specific future date.
The exchange of contracts for house buying is the process that creates a legally binding contract. It is at this point where a deposit is paid.
The final step in this process is the completion of the contract. Which is generally between 1 to 2 weeks after exchange.
The time between exchange and completion can be whatever period of time the parties require and agree. This is to enable the parties to get themselves ready for the moving, which has to happen on the day of completion.
What is exchange and what is completion when buying a house?
In order to understand the question “can you exchange contracts without a completion date“, it’s better to explain what ‘exchange‘ and ‘completion‘ are in relation to house buying.
What is Exchange of Contracts?
In England and Wales, exchanging contracts is the last but one step in a house purchase. Where completion is the final step in the process.
Under English & Welsh law exchange of contracts occurs after your solicitor has carried out all necessary searches. It’s after the mortgage has been arranged where necessary, the surveys are complete if required and there is agreement to the terms of the contract.
Once each party has signed the contracts and they have been exchanged between solicitors on either side, they are legally binding. For the exchange of contracts to be binding in law, there’s has to be whats referred to as ‘consideration‘.
Consideration in this case will be the ‘exchange deposit‘, which is generally 10% of the purchase price.
Up to the point when you exchange contracts, the house buying process is not legally binding in English and Welsh law. Prior to exchanging contracts, either a buyer or a seller can pull out of the process at any time.
What is completion of contracts?
Completion is when the balance of the payment for the property is passed over to the seller’s solicitor. It’s the point when ownership transfers to the buyer. This is the last thing that happens in the house buying/selling process. This is done between the buyers sellers solicitors.
The date of completion is when you physically own the property. After this date, your solicitor will notify the Land Registry of the transfer of ownership. It is on this date that you are also liable to pay the Stamp Duty on the purchase price of your new home.
Who decides completion date?
The date of completion is a date that is agreed by both parties prior to exchange of contracts.
The agreed date is often one or two weeks after the date contracts are exchanged to allow both parties to get their matters in order. The negotiations to decide on the date are done between the two side’s solicitors.
The completion date is important, as this is the day on which full payment is made to the seller, ownership is transferred to the buyer and when the move takes place.
Do you have to agree a completion date before exchange
To answer the question posed at the start of this article, which was “Can you exchange contracts without a completion date?” The simple answer is no you can’t.
Before exchange of contracts can take place, you and the seller will be required to agree a completion date. The completion date, which is the date when you’ll physically own the property, needs to be written into the contract before exchange takes place.
Once both parties have agreed the date of completion, the conveyancing solicitors will do their final checks and then exchange contracts.
Generally, the period between exchange and completion is 30 days or a month. But this can be any period you like and in some cases the completion date can be delayed to help the sellers buy their next property.
What is delayed completion?
A delayed completion is a longer period between exchange and completion than is normal. This period can be any length of time, as long as it’s agreed by both parties to the contract.
A delayed completion means your house sale won’t complete for a while, but it does mean you have exchanged contracts to secure the sale.
Can you exchange contracts and complete months later?
There’s nothing to stop you from exchanging contracts and completing months later, so long as the completion date is agree by both parties. It’s exchange of contracts that makes the transaction legally binding.
Buyers sometimes want to exchange contracts and complete months later on property that’s needs building work.
What about 3 months between exchange and completion?
To have 3 months between exchange and completion is not uncommon or even a longer period. But how long a delay you leave between exchange and completion is entirely up to what’s agreed between the buyer and seller of the house.
But the longer the period is, the more chance of something going wrong before completion.
How to make a delayed completion work in your favour
A delayed completion is where the date between exchange and completion is extended beyond the usual 30 days. The period between exchange and completion can be any time period you want it to be. But the period needs to be agreed before exchange of contracts between both parties to the contract. This could be 3 months between exchange and completion or longer.
With a delayed completion, your solicitor will write the completion date into the contract.
This tool is often used for investors to buy houses from home sellers who what peace of mind about the sale of their home. Selling a house is one of the most stressful things to do. Therefore a solution to reduce this stress is often welcomed.
The solution offered by investors (and by us by the way) is used so that you can rest assured that your house sale is guaranteed.
This means that you can begin looking for your ideal home with less stress. This will allow you to relax in the knowledge that your house sales isn’t going to fall through. It also puts you in a better buying position. You are not in a chain of buyers. This is a huge advantage when buying.
What is the maximum time between exchange and completion?
There’s no maximum time between exchange and completion in theory, but it would be unusual to have a delayed completion of more than 12-18 months.
The maximum time period must be agreed by both parties in any event and included in the contract of sale.
I have written an article on the maximum time between exchange and completion. In this article I have considered the reasons for a delay in completion. This link jumps directly to these reasons and are worth a quick read.
Exchange with delayed completion stamp duty
On a contract of an exchange with delayed completion Stamp Duty is still paid 14 days after the day of completion.
Your conveyancing solicitor will deal with the Stamp Duty return on your behalf and pay the amount due once they have these funds from you.
Please don’t forget to read this before you leave…
Please don’t forget to also read this article to discover how you could save £71,475 on your next mortgage if you sell your house and rent before buying again. As I said earlier, even I was amazed when I did the calculations!
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