What is a Simultaneous Exchange and Completion?

Normally, there is a period of over a week between exchange of contracts and completion in order to deal with various post-exchange and pre-completion matters and in order to give lenders their required timescales for processing a request for ordering mortgage funds (which on average is normally at least 5 working days).

 

In order to minimise the risk of having a short time period between exchange and completion, an option is to aim for a simultaneous exchange and completion.  A simultaneous exchange and completion is where exchange of contracts and completion happen on the same day.  Sometimes a simultaneous exchange and completion is aimed for where there is a tight deadline to complete and the buyers are giving the lender a short timescale to release funds.  A simultaneous exchange and completion may also be aimed for if the parties are aiming for a specific completion date but are awaiting some documentation to arrive and this is expected before the suggested completion date.  The tasks which are usually carried out between exchange of contracts and completion still need to be carried out, but these are carried out prior to the simultaneous exchange and completion in preparation.  Buyer’s solicitors will normally order the mortgage advance from the lender for the completion date.  If the funds arrive in time and assuming that all matters have been dealt with and documents are available, then the parties can proceed to a simultaneous exchange and completion when the mortgage funds arrive.  However, if the lender cannot release funds in a short timescale, then the parties may have to wait a day or two until mortgage funds arrive in order to exchange and complete.

 

A simultaneous exchange and completion may therefore be a tool to facilitate an earlier completion date, but there is some uncertainty.  It is therefore probably more suitable for transactions where there is no chain and probably more suitable for first time buyers, buy to let investors and/or people who do not intend to move into the property immediately.  It is less suitable for those who are in a chain.  Aiming for a simultaneous exchange and completion where there is a chain does make things more complex legally and from a practical point of view, particularly where the parties in the chain need to book removals.

 

If you are buying or selling a property, please contact Brian Craig on 020 7703 5034 or bc@meaby.co.uk for timely advice.