A common question which is asked is how long there will be between exchange of contracts and completion. Not so long ago it was traditional to have at least two weeks between exchange of contracts and completion in order to allow time for the various tasks between exchange of contracts and completion.
Nowadays the time between exchange of contracts and completion is normally shorter. It is now more common to have between one and two weeks between exchange of contracts and completion.
From a legal point of view, there are various tasks which need to happen between exchange of contracts and completion.
Buyers Exchanging Contracts
For a buyers solicitors, this includes obtaining Land Registry searches, obtaining completion information and a completion statement from the sellers solicitors and preparing and sending to the buyers a completion statement showing the balance required to complete.
Sellers Exchanging Contracts
For a sellers solicitors, tasks include obtaining a redemption statement from the lender (who may take at least a few days or even a week to provide), obtaining the estate agents’ invoice, preparing completion information to send to the buyer’s solicitors and preparing a completion statement for the seller.
A buyer or seller will need to arrange various practicalities such as arrange removals, arrange time off work, make sure their purchase money is readily available for transferring to their solicitors before completion, etc.
A major factor in the timescale between exchange of contracts and completion is where a buyer is buying with the aid of a mortgage. Lenders usually state in their mortgage instructions that they require a minimum of five working days notice to release mortgage funds.
Exchange of contracts is when the contract becomes legally binding and a fixed completion date is set, so it is advisable to have more than a week between an exchange of contracts and completion in order to give the lender their suggested timescale to release funds.
It is often prudent to allow more than a week between an exchange of contracts and completion in order to allow a little bit of a buffer. Also, the buyer’s solicitors will usually ask for mortgage funds to arrive the day before completion in order to avoid delays on the day of completion.
Lenders can often release funds in less time than their suggested timescales but they can never guarantee that they can do this. If the lender is particularly busy or short-staffed, then releasing funds in less than their suggested timescale may not be possible. It is therefore advisable to allow a longer time period between exchange of contracts and completion in order to give the lender their full timescale for release of funds.
If the time period between exchange and completion is less than the lender’s required timescale, and if the lender cannot release funds quickly, then you would not be able to complete if the mortgage funds do not arrive in time for completion.
In certain circumstances, it may be possible to aim for a simultaneous exchange and completion in order to aim for a completion in a short timescale. This will be the subject of a later blog post.
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If you are buying or selling a property, please contact Brian Craig on 020 7703 5034 or email@example.com for timely advice.
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