What Can Hold Up Exchange Of Contracts?
Exploring what can hold up exchange of contracts and how you could speed up the process...
When selling your house, there are two big steppingstones which you will be wanting to reach successfully – exchange and completion.
Exchange of contracts makes the deal ‘legally binding’ allowing you to start feeling sort of confident that the deal will go ahead as planned. Completion is the part of the process everyone sets out to achieve, the actual moving ‘bit’.
We can understand why completion is so desirable and important but why is exchange so longed for too? And why does it take so long to get there?
If you’re trying to reach exchange yourself, you will probably be wondering why it’s taking so long, causing you to google ‘what can hold up exchange of contracts?’ – which is probably how you’ve ended up here!
Well wonder no more! We’re going to talk you through all the possible reasons exchange of contracts may be held up, as well as what to do if someone pulls out of exchange and how you can speed up the process.
What is exchange of contracts?
Exchange of contracts is the part of the ‘moving house process’ where the deal becomes legally binding. Generally exchange will happen anywhere between 7-28 days before completion, but in some situations, it can be done months in advance.
Contracts are ‘verbally exchanged’ over the phone between the buyer’s and seller’s solicitors, where they will run through the contracts to check they’re identical. Once this is done and both parties are happy, they will send each other a hard copy of the contract.
After exchange of contracts, either party will face serious consequences should they pull out of the deal and so you can normally feel fairly confident the deal should go through.
You can actually exchange contracts on the day of completion, but this is less recommended as there’s more room for things to go wrong.
What needs to be done to exchange contracts?
There are a few different things that both parties need to do in order to be able to exchange contracts. As a seller you will need to:
You have checked the results of the buyer’s survey, and any further negotiations have been done
You have agreed whether the sale price is going to include fittings and fixtures
Arrange together all the paperwork for your house which the buyer may need, for example proof of planning permission or instructions for any household appliances
Make sure you have your finances sorted for your next property, with a house repayments offer in writing
Ensure you have your deposit ready for the house you’re buying
Inform your property’s insurance provider that you’re moving and so need to cancel the policy
You have read the contract in full and are happy and ready to sign it
What time of day does exchange of contracts happen?
Exchange of contracts can happen at any time of the day but will normally happen around midday. This will depend, however, on how many people are in the chain below you and how smoothly their completion goes.
This is because exchange starts at the ‘bottom’ of the chain and works its way up after each exchange. The solicitor at the bottom of the chain gives the solicitor above them a ‘release time’, which is the time that it must come back to the bottom solicitor that all exchange of contracts is confirmed.
If it hasn’t reached the bottom solicitor by the release time, then exchange of contracts can’t happen on this date and everyone involved must try again the next day.
How long does it take to exchange contracts?
As we mentioned earlier, there’s a lot that needs to be done before exchange can take place and so it can take around 8 to 12 weeks before exchange. It is possible to speed up this process, but we will onto that a little later on…
What can hold up exchange of contracts?
Every moving situation is different so there’s no ‘one size fits all’ answer, explaining why everyone’s exchange of contracts will get delayed. However, we do have a list of the most common reasons on what can hold up exchange of contracts, helping you know what to look out for and how to try avoiding it:
Busy solicitors – Generally speaking, a solicitor will normally have multiple clients at once, making it hard for your sale to be a priority. Also, since COVID, solicitors are extremely overworked and are still dealing with the backlog of sales since the close of the housing market back in March 2020
Slow surveyors – Once a survey has taken place, both buyer and seller will have to await the results before being able to proceed towards exchange of contracts. You may find that your surveyor is slow to provide results, holding up exchange of contracts
Unanswered questions – If either party’s solicitor feel unsatisfied with an answer they have received, they will not allow the process to proceed until they receive an answer which they’re happy with, causing potential long delays
Complicated transactions – Some transactions will be made more complex if they have unusual elements or extremely long chains, causing a potential hold up to exchange of contracts
Slow house repayments lenders – Most people will require a house repayments to buy a property and they will need to have their house repayments in place before exchange of contracts, meaning a slow house repayments lender will cause a hold up
The buyer or seller – Sometimes it’s the buyer or seller holding up the process themselves. Although it may not be on purpose, this will still cause a delay. If this is the case, it’s up to the estate agent to get involved and speed the process along
What happens if a seller pulls out after exchange of contracts?
If you as a seller pull out after exchange of contracts, you’re breaching the terms of the contract and so will face consequences.
The buyer can issue a ‘Notice to Complete’ to the seller. This is a legal notice that the party who pulled out (in this case the seller) has a 10-day grace period to complete the sale. The seller will also be liable to pay interest to the buyer, which will be calculated daily.
The buyer will also be able to claim back the original deposit and all documents received by the buyer must be returned to the seller, at the seller’s expense. The buyer can also claim back any cost incurred by them, for example house repayments interest, removal costs, legal fees and searches, which must also be paid back by the seller.
In other words, although it does happen, you don’t want to pull out of exchange…
How do you speed up exchange of contracts?
Speeding up exchange of contracts is going to take co-operation from all parties, as there are many different aspects which will need special attention in order to get everything ready ASAP.
It’s not only the buyer, seller and solicitors who will have to put in the work, the estate agent will also need to make sure they’re regularly in contact with all parties, to push things through.
If you’re a seller wondering what you can do to avoid what can hold up exchange of contracts and how to speed the process along, then our list of top tips will be helpful for you:
Before you put your house on the market, get together all the relevant paperwork for your house, which a buyer may need. This could be electricity certificates, planning permission, warranties, etc
Familiarise yourself with the process, making sure you understand it all. This way you know what to expect and will be available to give any information when asked
Choose a solicitor who doesn’t just specialise in a good quality service but also one who provides a fast service
Don’t go on holiday! This may seem a fairly obvious one but if you’re wanting things to move along quickly going to a different country is going to make things much harder
Respond to enquiries and complete any relevant forms and paperwork as soon as you receive them. Doing this in a timely manner will mean a smooth process from your side
Before receiving an offer on your house, make sure you’ve instructed and made your solicitor aware that you are selling and aim to do so quickly. This will allow the solicitor to contact your house repayments lender for the title deeds and prepare the sale contract, so it will be ready as soon as you find yourself a buyer
Make sure you choose a reliable buyer. Choosing a reliable buyer will be key to making sure the exchange of contracts process goes as smoothly and quickly as possible, meaning far less hassle to you as the seller. We know that finding a reliable buyer may sound easier said than done, but we may be able to make the hunting process that little bit simpler…
Here at The Property Buying Company, we’re a cash buyer of houses, with over 50 years combined experience, with the aim to make the selling process as easy as possible for you!
Whilst our main priority is to provide you with a high-quality service, we also aim to complete in a FAST timescale of your choice, meaning there’s no delay to exchange of contracts here.
Alongside being able to complete in as little as 7 days (yes really!), we will also cover all the costs associated with selling your house, including the legal fees! Yes – you really will get our cash offer in FULL in your bank!
Ready to start a quick sale, with no delays to exchange of contracts? Give us a call or fill in our online form for a free, no-obligation cash offer which you could have in your bank, as soon as you want it…