There are two important stages involved in the sale or purchase of a house:-

1. EXCHANGE OF CONTRACTS

'Exchange of Contract' is when the Buyer/Seller commits himself to buy and locks himself into the transaction. It is also the date when part of the purchase price in the form of a deposit, is paid by the Buyer to the Seller. The actual ownership of the property does not change at that time.

2. COMPLETION

'Completion' is when the Buyer will be expected to pay the balance of the purchase price and it will also be the moving date. This is the date when the ownership of the property will pass to the Buyer.

WHAT HAPPENS PRIOR TO EXCHANGE OF CONTRACTS

Before a Seller or a Buyer commit themselves on exchange of contracts, there are four main items which have to be attended to:-

1. The Seller's solicitors will obtain the title deeds to the property and will then prepare a draft Contract which they will forward to the Buyer's solicitors for approval. It is usual for a Buyer to be asked to call at his solicitor's office to discuss the contents of the Contract or alternatively, the solicitor may forward a written report to the Buyer explaining the Contract in detail.
   
   
2. The Buyer's solicitor receives answers to various Forms including Seller's Property Information Form and Fixtures, Fittings and Contents Lists from the Seller's solicitors. The enquiries deal with a wide range of matters which the Seller should be able to answer from his personal knowledge of the property, for example, whether the Seller is aware of any right of way across the back garden which is enjoyed by a neighbour. If the Seller has carried out an structural alterations to the property during his ownership and what fixtures and fittings at the property are included in the sale price and will be left by the Seller.
   
   
3. A 'Local Authority Search' is submitted to the Local Authority and this can be done either by the Buyer or Seller's solicitor. The Search consists of a set of enquiries which are answered by the Authority and reveal any entries in their registers which may adversely affect the property, for example, that the property is built without planning permission, that there are outstanding charges for the up-keep of the road, or that the Council wish to put a new road through the back garden of the property.
   
   However, the Search is limited to what will physically affect the property and does not provide comprehensive details with regard to the development of adjoining and adjacent land. In particular, it will not provide details of residential development e.g. the construction of flats or other residential units or a proposed extension/alteration to an adjoining property. The Buyer would be advised to visit the Planning Department in the Council Offices and to inspect the Planning Registers to establish whether Planning Applications have been submitted relating to adjoining land and also to examine the Local Structure Plans for the area to establish the Council's future proposals for the area.
   
   
4. In most cases the Buyer will need to borrow monies from a Bank, Building Society or other lending institution to enable him to pay all or part of the purchase price to the Seller. A verbal commitment from a Building Society manager or a financial adviser that the mortgage money will be available is not sufficient and the Buyer will therefore need to see a written 'Offer of Mortgage' before legally committing himself to the purchase.

PLEASE NOTE:

In most transactions the Buyer's solicitors will also be instructed to act for the Mortgage Lender and will, therefore, owe a duty to inform the Mortgage Lender of all matters relating to the transaction. In some cases, this could conflict with the interest of the Buyer.

The Buyer's solicitor will need to examine carefully all of the documents referred to above and draw the Buyer's attention to any problems before the Buyer proceeds to exchange of Contracts.

EXCHANGE OF CONTRACTS

Prior to exchange of Contracts the Buyer will sign one copy of the Contract document and the Seller will sign an identical copy. The Buyer will also be asked to pay to his solicitor the deposit and when the Seller and the Buyer have agreed upon the completion date, contracts are exchanged between the Buyer and the Seller's solicitors. In most cases the exchange is effected over the telephone and confirmed through the post. It is not usually necessary for either the Buyer or the Seller to be present in their solicitor's office at that time. The Contract is then legally binding on both parties and ensures that if either party refuses to proceed with the transaction he will be forced to pay compensation to the other party.

Usually after exchange of Contracts the Buyer's solicitor will prepare the document that will transfer the legal title in the property to Buyer. The solicitor will also prepare the Mortgage Deed and apply for the mortgage monies to be released in time for the completion date and will undertake other searches which will protect the Buyer and the Bank or Building Society involved by ensuring that the Seller has not entered into any other Contract or obtained another mortgage on the property.

The solicitor will ask the Buyer to settle his account prior to completion and usually at the same time as he pays to the solicitor the balance of any monies required towards the purchase price.

COMPLETION

Upon the date of completion the Buyer's solicitor will ensure that the balance of the purchase price is paid to the Seller's solicitor as soon as possible to ensure that the keys are released to the Buyer without undue delay. In the majority of cases, the funds are transferred to the Seller's solicitors by means of a 'Bank Transfer System'. In some cases a delay can occur where two different Banks are involved. It is also difficult to know precisely how long it will take the Seller to clear his possessions from the property, but in most instances, the keys are usually available for the Purchaser to collect shortly after 12 noon.

AFTER COMPLETION

The Seller's solicitors will forward the title deeds and documents to the Buyer's solicitors on the completion date. Upon receipt of the deeds the Buyer's solicitors must arrange for the payment of any Stamp Duty to the Inland Revenue and for the registration of the Buyer's title at H. M. Land Registry. It may also be necessary to serve various notices on Life Assurance Companies, a Landlord, the Bank or Building Society etc. to advise them that the completion has taken place. It may take some weeks for the registration of the title to be completed but once this has been attended to, the Buyer's solicitor will send a copy of the title deeds to the Buyer and if the Buyer has a mortgage, the original title deeds and documents will be forwarded to the bank, Building Society or other lending institution for them to hold as security for the mortgage until it is repaid.