Exchanging Contracts: The Last Step of the House Buying Process
These days contracts are usually exchanged over the telephone and most solicitors will telephone immediately to let you know the good news. It's safe to open the champagne now. Things can go wrong between exchange and completion but it is extremely rare. I have dealt personally with only three cases.
In the first one the purchasers decided to end their marriage a few days before completion was due to take place. Neither party wanted the house and they ended up forfeiting their ten per cent deposit. In the second case, the purchaser's father-in-law refused to honour a promise he had made to lend money to fund the purchase after a family row. Again the ten per cent deposit was forfeited. In the third case, the vendor went bankrupt between exchange of contracts and completion.
Nevertheless there are a number of legal procedures that must be dealt with before completion can take place. The main ones are as follows.
Evidence of title
The vendor's solicitor will send your solicitor a copy of the deeds or a summary of their content. If your solicitor has any questions he will make 'requisitions on title', ie put them in writing.
Draft transfer/conveyance
The vendors' solicitor will send your solicitor a draft transfer (for registered property) or conveyance (for unregistered property). This is the deed which passes the vendors' interest in the property to you.
Mortgages
Your solicitor will write to your mortgage lender to ensure that the mortgage money is available in time for completion.
Engrossment of transfer or conveyance
When both solicitors are satisfied with the terms of the deed it will be 'engrossed', ie a final version will be prepared for signature by both sides.
Signing of final documents
You will be asked to sign the final documents and provide a banker's draft for any further money required to fund completion over and above your mortgage advance.
Final searches
Your solicitor will conduct a bankruptcy search in case the vendor has just been declared bankrupt (in which case the property would no longer be his to sell). He also conducts a Land Charges Search to ensure that no last minute charges have been registered against the property. These could affect the mortgage lender's security.
