What Happens If I Change My Mind Part-Way Through? Am I Legally Bound?
Whether you are buying or selling a house, flat or bungalow, you can change your mind before the point at which contracts are exchanged. If you have made or accepted an offer, you are not legally bound to follow it through until you and the other party have exchanged contracts.
What Does ‘Exchanging Contracts’ Mean?
Exchanging contracts means exactly that. The conveyancing solicitors for each party (the buyer and the seller) will finalise the contracts and exchange them by telephone.
Once an offer has been accepted, a mortgage has been arranged, searches have been completed, and all other requirements have been carried out – including securing the deposit and agreeing a completion date – each party will sign their respective contract.
The solicitors will then read the contracts to one another during a telephone conversation to ensure they are identical and agree that exchange has taken place at a fixed time.
The contracts are physically exchanged via post and the deposit for the property is paid, finalising the process. You are now legally bound to buy/sell the property on a certain date and failure to do so could result in the loss of the deposit (if you are a buyer), as well as possible court action.
When Do I Pay My Deposit?
Unless you have arranged to exchange and complete on the same day – neither impossible nor rare in this day and age – you will pay your deposit to the seller’s solicitors when the contracts are exchanged.
What Is a Property Chain and What Happens If Someone Breaks It?
A chain occurs when a buyer is purchasing a property from a seller who is also buying a property and wants both transactions to complete on the same day. The completion of one transaction is reliant on the completion of another.
A property chain can break if one party withdraws, for example, due to a survey or legal issue.
How long will it take to buy my new house?
On average it takes approximately 6 to 8 weeks from instructing your solicitor to the date of completion. Things can be slowed down if you are obtaining a mortgage and your new lender has particular requirements or if you are in a chain.
In a chain, the slowest party is controlling the speed of all the other parties. If you are selling a property as well it is likely that you will want to tie your sale and purchase together and this could also slow things down as one is dependent on the other.
How long will it take to sell my house?
On average it takes approximately 8 to 12 weeks from instructing your solicitor to the date of completion. Things can be slowed down if you are in a chain.
In a chain, the slowest party is controlling the speed of all the other parties. If you are buying a property as well it is likely that you will want to tie your sale and purchase together and this could also slow things down as one is dependent on the other.
How long will it take to move into my new home?
The majority of conveyancing transactions are finished within 18-22 weeks (due to current market conditions and the impact of Covid-19 the national average is currently 19 weeks). The duration of time it takes to complete your transaction will be determined by any delays outside our control. Your lawyer will go over this with you and try to give you an accurate estimate of how long your conveyancing will take from the start.
Transaction timelines can be affected by a variety of circumstances, including:
- A long chain – the number of residences being purchased or sold while waiting for everybody in the chain to reach the stage of exchange;
- A delay in Local Authority search results; and
- The lender has not yet made a mortgage offer.
How do Estate Agents help during the transaction?
- Keeping track of every person’s location in the chain;
- Assisting in the agreement of a completion date along the chain;
- Pursuing the lawyers or other parties in order to speed up the transaction; and
- Assisting you with any fixtures and fittings talks or negotiations with the other party.
What are Disbursements?
These are third-party fees or expenditures that we pay on your behalf. Local government searches are an example of this. A member of our Conveyancing team will explain all expenses to you in detail.
Is it possible to Exchange and Complete on the same day?
This is unusual, although it is achievable if:
- This is agreed upon by all partners in the chain.
- We have all of the funds needed to execute the deal; and
- All of our search results have arrived.
What are cleared funds?
These are finances that have been cleared by our bank. For example, once a cheque is deposited, the funds are cleared in seven business days. We cannot spend this money until the funds become available. As a result, you must ensure that any money we seek for the exchange or completion is provided to us in a timely manner.
Bank draws guarantee that the money will be delivered to us but otherwise function similarly to checks. Please let us know whether you want to send the funds directly to our account. This approach often transfers funds on the same day it is completed.
What should I do about the house keys (new and old)?
If you’re looking to sell:
Typically, the keys are left with the brokers for the buyer to collect. You can make personal arrangements with the buyer, though, to give over the keys directly. If personal arrangements are established, you must not hand over the keys until we notify you that the money has been received.
If you’re looking to buy:
Unless you have made arrangements to get the keys directly from the seller, the keys can be picked up from the agents. If the agents are holding the keys, they will only deliver them to you once the seller’s solicitor has received payment.
When should I arrange the buildings insurance for my new home?
When you buy a house, the contract will normally indicate that the property is at your risk from the day the contract is signed. This implies you must finish your acquisition even if the property has sustained significant, total damage or destruction between exchange and completion. It is consequently critical that you obtain Buildings Insurance for the property before exchanging contracts. Insurers may refuse to cover houses that have a history of floods, for example. Prior to the exchange of contracts, it may be required to study house insurance policies from several providers to ensure suitable coverage.
Please keep in mind, in few cases if you are unable to secure appropriate house insurance, you may be unable (or unwilling) to proceed with the property purchase.
If you take out a mortgage, the lender will have certain criteria about the risks covered, such as the value for which to insure the property and the insurance excess. When we get your mortgage offer, we will notify you of these details.
The lender will have specified insurance arrangements; if you want to create your own, you must notify us immediately.
As a seller do I need to maintain buildings insurance until completion?
Yes, you must return the property in the exact condition in which it was at exchange.
Why can there be long completion dates?
You must consider any potential delays in the period between exchange and completion.
These factors may complicate your mortgage offer:
- Mortgage offers are typically valid for 6 months from the date of the offer.
- There is no assurance that the mortgage lender will grant any extension – if contracts have been exchanged, you are legally obligated to complete the transaction; and
- The mortgage lender may review the property’s value, which might decrease or increase depending on the market.
Again, once Contracts have been exchanged, you are legally obligated to complete the transaction. Check that the duration of any mortgage offers you get matches to the estimated completion date.
For further information and help on buying or selling a home please contact our team at www.jmrsolicitors.com