What is "Exchange of Contracts"?

Once the buyer and the seller (and any other buyers and sellers in a property "chain") have finalised the legal work, signed their respective contracts and a completion date has been agreed, the solicitors will exchange contracts. The exchange process takes place over the phone under a prescribed formula and the date and time of exchange are recorded by both conveyancers and it is at that point that the contracts become legally binding.

Both you and we need to be certain on exchange that you will be in a position to complete on the date agreed. If you decide you do not want to move after exchange of contracts, or you fail to complete for any reason, you can be sued for breach of contract by other parties in the chain. Any deposit you may have paid on exchange of contracts will be forfeited by the seller if you fail to complete a purchase after contracts have been exchanged.