The most common time frame to complete after exchange of contracts is one to four weeks. But having said that, is there a maximum time between exchange and completion? Let’s take a look…
So what is the maximum time between exchange and completion? The maximum time between exchange and completion isn’t fixed and can be any length as long as both parties agree to the time period. But the normal period between exchange and completion is one to four weeks. Where the contract period is longer than the norm, this is usually referred to as a delayed completion.
How long between exchange of contracts and completion?
The normal period between exchange and completion is one to four weeks. But when you’re agreeing your completion date and given that the transaction is legally binding once exchange has taken place, it’s important to get the period right.
The one to four week gap between exchange and completion is usually to allow all parties in the chain to make moving arrangements. Normally, your solicitor will have made sure all is in place contractually before exchange takes please.
If you are using a mortgage you are advised to have this in place before exchange too. But the period between exchange and completion can be longer, so long as the extended period is agreed to by both parties. Where the contract period is longer than the norm, this is usually referred to as a delayed completion.
The normal period between exchange and completion is two to four weeks. But you can have whatever period to suit you included in the contract, so long as both or all parties agree to the delay. Not many property transactions have a longer exchange and completion period than four weeks. But there are times when a longer period is necessary.
But you could argue that the longer the gap between exchange and complete, the greater the risk of something going wrong. This is especially true during a situation like the UK is going through at present, that is the Coronavirus-Covid-19 pandemic. In this scenario solicitors are recommending a same-day exchange and completion.
So let’s take a look at why you would need a long completion period after exchange of contracts.
Why would you need a long completion date after exchange of contracts?
It’s important to note that you can’t exchange contracts without a completion date. But you can have an extended completion date (or a delay) so long as both parties to the contract agree. Plus where there’s a conveyancing chain, all parties to the chain must also be in agreement to an extended completion date. Let’s take a look at a few reasons why you may require an extended completion date.
Reasons for a delayed completion
- Renovation works are required on either the property you’re selling or on the house you’re buying. In this case an investor may agree to buy the house on a delayed completion. During the contract period between exchange and completion the renovation works can be done. This delay enables the buyer to add value to the property in advance of completion. The typical delay in this case is anywhere between three to twelve months. This strategy works well for the buyer and seller in a depressed property market. Typically in this scenario a reduced deposit is agreed of 5% instead of 10%.
- A delayed completion might be necessary to arrange for funds to be put in place.
- The sellers might be arranging to go overseas and need time to organise the move. But the reason for wanting to exchange is that it gives security and certainly.
- The house may be a farm or another property with a traded business and time is needed to deal with certain aspects of the farm or business.
It’s important to mention that whilst in most cases contracts complete after exchange has taken place, but a small percentage don’t. Which means that sometimes things can go wrong between exchange and completion, and so by extending the time frame between these two dates, the risks are increased slightly. However, most people don’t default after contracts have been exchanged due to the legal ramifications and costs associate with such a default.
What is delayed completion?
I’ve made reference to a delayed completion, so what is delayed completion?
As described above, there are various situations in which the legal completion of a sale is delayed. Also, as explained, legal completion normally takes place within one to four weeks after exchange of contracts. Although in recent times this period has been reduced where the norm is more like one to two weeks maximum. Therefore any extended period or completion beyond this one to four week periods is what’s referred to as a delayed completion.
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