Guidance On Exchange & Completion Dates - How it Works
BEING IN A CHAIN
Sellers may have an onward purchase, and vice versa. There can be many people in a chain, and this will usually delay matters.
Conveyancers are not always made aware of how many parties are in the chain and you should discuss this with the Estate Agents and Conveyancer.
When your Conveyancer prepares your file to exchange, and or complete, they are reliant on the assistance and co-operation of all parties.
Being able to exchange and complete depends upon others being ready when you are.
THE EXCHANGE DATE
Your completion date only becomes fixed once exchange of contracts has occurred. BUT exchange cannot happen until the entire chain is ready.
This means that everyone in the chain is in receipt of satisfactory replies to enquiries, searches and the survey and that each Conveyancer is holding signed documentation and, for buyers, the deposit funds, usually 10% of purchase price.
When you are buying, and have a mortgage lender, it is vital that your Conveyancer obtains your lender’s confirmation that they will release the mortgage advance in good time for completion. Just because they issue a mortgage offer does NOT mean lender funds are guaranteed for your completion day.
Conveyancers need confirmation regarding lender funds before committing you to a legally binding exchange of contracts.
If your lender releases the money too late on the completion date, and the banking system has closed for the day, then we cannot complete, and you are in breach of contract and may need to pay compensation.
When everyone is ready to exchange your Conveyancer will contact you to take your authority. You will be asked to confirm that you understand the legally binding nature of exchange and that you understand that you are legally bound from exchange to complete on the agreed completion date.
This includes putting your Conveyancer in funds and sending them your buildings insurance (unless the property is leasehold).
The completion date is fixed from exchange and you cannot withdraw without breaching contract. You can be sued for losses (if you refuse or cannot complete) and you could lose the deposit paid on exchange.
THE COMPLETION DATE
Your Conveyancer must receive your balance to complete, any related sale proceeds from your buyer and your mortgage advance in good time on the day of completion. The banking system closes at 5pm and it is not possible to send any monies out after this time
Conveyancers will usually ask your lender to release the mortgage advance on the day before completion. You will pay an extra day’s interest for this. Once the completion monies are sent electronically to the other side they cannot be tracked and the other side can receive them at any time up to close of business that day (i.e. by 5:00pm).
Unfortunately, it is impossible to guarantee what time of day completion will occur. It is not possible to tell when the monies will be received and this can be very late in the day.
NB: If there is a long chain involved then completion is likely to occur later in the day.
On a Sale
Where you are both selling and buying a property you must clear your sale property of all belongings (except items you agreed to leave in the Fixtures & Fittings Form) and leave by midday (at the latest). You may wish to clear and vacate the property before the completion date if you do not live there.
Once the buyer has paid for the property they MUST be given the keys and allowed to occupy. The estate agents will release the keys to your buyer when authorised by the selling Conveyancer i.e. upon confirmation of monies received.
Conveyancers will try to transmit any net sale proceeds to you on the same working day. However, this is not always possible because of the sheer number of bank transfers to send and the cut off point for close of business.
On a Purchase
With your purchase it is only when the seller’s Conveyancer confirms receipt of the monies that completion has occurred. You can then collect the keys, usually from the Estate Agents.
There will be an unavoidable period of limbo between your sale and purchase completing due to the nature of the chain.
On occasion you may need to allow the seller extra time to move out. However, they cannot live in the Property once completion occurs. To do so breaches contract, buildings insurance and mortgage terms.
Late Completion & Not Completing as Agreed - After You Have Exchanged
If you do not complete on the agreed date then you are in breach of contract and will most likely be served with a Notice to Complete. This makes time of the essence and you must immediately complete. You now face penalty payments.
In addition, you may be asked to pay compensation for losses suffered as a result of the breach.
Completion must occur by either 12 or 2:00pm (see your contract terms).
If you have not completed by 2pm, i.e. the monies are NOT where they need to be at the other side solicitors, or you have not vacated the property, then you are in breach.
At this point special contract terms come into play and your Conveyancer will assist you and explain the same. You will probably need to cover the reasonable losses of the other side. These can include mortgage interest payments, hotel costs, removals and storage costs.
If there is a chain in your transaction then your failure to complete will have impacted on the other side and that they are also in breach and subject to penalties.
Speak to your Conveyancer asap.
If you are looking to buy or sell a property and want to engage an experienced conveyancer, please contact us for a quote.