One of the aspects of a house sale which Conveyancing Solicitors in Liverpool are often asked to explain by clients is the significance of the 'exchange of contracts'.
When Liverpool Property Lawyer Sukhi Hayre acted for Mr and Mrs D on the sale of a house fronting Carstairs Road, Liverpool L6 in 2010 they wanted to know why it would be unwise for them to book their removal van until contracts had been exchanged.
A Conveyancing Solicitor in Liverpool advises on exchange
In England and Wales any agreement for the sale and purchase of land (which includes the buildings and other permanent fixtures) has to be in writing, or it cannot be enforced by the courts.
Once Sukhi received confirmation that Abensons of 102 Allerton Road, Liverpool, L18 2DG would be the buyers' Conveyancing Solicitors in Liverpool she sent them the draft contract and printed another copy to be signed by her clients.
When the buyer's Liverpool Property Lawyers had made all their searches and enquiries they confirmed that the wording of the contract was agreed. Sukhi then asked her clients to sign the document together with the transfer deed and return it to her.
The clients were also buying another property, so she also asked them to sign the contract for that purchase, along with the mortgage deed. They were reluctant to sign straight away, as no final completion date had then been agreed.
However, Sukhi explained that signing the contracts would not immediately commit them, and no legal contract would come into existence until she had formally 'exchanged' contracts with the other Conveyancing Solicitors in Liverpool involved in the two transactions.
Either party can pull out before exchange
When a completion date had been agreed by everyone in the chain, Sukhi phoned Mr and Mrs D for confirmation that they still wanted to go ahead. They happily authorised her to proceed.
Once authorisation was received, she contacted the other side's Conveyancing Solicitors in Liverpool for confirmation that they were holding a contract signed by their clients.
A formal exchange was then agreed in accordance with a protocol published by the Law Society. This requires each Conveyancer to send the signed contracts to the other, but the contracts become legally binding at the time of the phone call.
Until that exchange has taken place either party can pull out of a sale or purchase.
Nowadays it has become common for completion to take place within a few days of this exchange, or sometimes they take place on the same day. This can lead to problems – for instance if a first-time buyer at the bottom end of a chain gets cold feet and pulls out, the whole chain will collapse despite that fact that everyone else has had to make their removal arrangements.
So the advice from Conveyancing Solicitors in Liverpool is generally that, until contracts have been exchanged, any removal arrangements should not be finalised.
If you have any questions, speak to our team on 0330 660 0286 now, or get a quote for Conveyancing Solicitors in Liverpool.