You will NOT need to go to your Conveyancer’s office for exchange to occur. You will already have signed the contract in readiness. In some instances your Conveyancer will have authority to sign for you. The signed contract is held on file for safekeeping until exchange occurs. By signing it, you are not legally bound and exchange has not happened yet.
The exchange of contracts is carried out over the telephone with each Conveyancer speaking with the opposite Conveyancer. This is a telephone call made in your absence. Where there is a long chain it is time-consuming as each party must exchange one by one. If one part of the chain is not available, or not able to exchange, then exchange is not going to happen. It is a chain and it goes one by one.
AUTHORITY
You will need to give your authority to exchange beforehand. You must also confirm you understand the legally binding nature of exchange. The same completion date must be agreed by all parties for exchange to be successful. The price and deposit payable on exchange must also be agreed along with fixtures and fittings being sold.
You can give authority to exchange via email or telephone call. Exchange and completion occur without you being present. If exchange does not occur on the day you gave your authority then your authority expires and must be re-requested on the next working day. This is a safety measure in case your circumstances should change overnight.
INSURANCE
Unless your property is leasehold, you must make sure your buildings insurance is valid and in place from the point of exchange. You can place insurance on Notice before exchange. Make sure it is then in place upon exchange. Take care to have your lender's interest noted (i.e. that they are the mortgage lender) and the insurance cover, at a minimum, must be for the rebuild value of the property. You do not want to be under-insured.
Once exchanged you must complete despite any property damage. Buildings Insurance is therefore vital. Do not under-insure. It is not worth it. Do not assume the seller will ensure as they are not obliged to do so.
10% DEPOSIT
The standard deposit on exchange is 10% of the purchase price. It is paid to the seller’s Conveyancer on exchange and the balance of the purchase price is paid on the completion date. This is what your Conveyancer means when they talk about the deposit. Whereas you, and your broker, may talk about the deposit but you mean the sum of money you are investing into The Property after your mortgage advance. When your Conveyancer refers to deposit, they mean the 10% of the purchase price, which is required upfront on exchange.
5% DEPOSIT
If you are in a chain the deposit may be coming up the chain. If there is a first time buyer at the beginning of the chain, and they are having a 95% mortgage, they will only be investing 5% and the deposit for the chain will be 5% of this purchase price rather than the normal 10%. That 5% payment would be the sum noted as the deposit by the chain. It will need to be agreed throughout the chain as it is lower than the standard 10% required. Do not assume the whole of the chain will accept 5% as they’re not required to do so. They must be asked to consent. They may say no as they could feel that 5% is not a significant enough figure to use as a deposit for a high value property.
EXCHANGED
Once exchange has successfully occurred you are legally bound to buy the property on the completion date and if either party does not complete on the agreed date then penalty interest and compensation are payable.
You can now hand in your notice to your landlord* and you may book Removals. It does happen, but it would be unlikely to go wrong from this point. Breach is rare as deposits are lost.
*if applicable.
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