When building up to the all-important exchange of contracts, there are many questions both buyers and sellers can find themselves asking. Today we focus on what your contract really means…
Did you know?
A contract for the sale of land or property has to be in writing. If you are the seller your lawyer is always responsible for preparing the draft and final contracts. As a buyer, your lawyer acts to agree and approve it on your behalf. As well as it being in writing, for it to be binding it must incorporate all of the terms expressly agreed between buyer and seller and must be signed on or behalf of all parties.
Exchange of contracts
The point of getting to exchange your contract is usually one of relief for both sides. Even though it can happen, it is extremely rare for either party to pull out after exchange.
Up until the exchange of contract, neither side has any legal obligation to buy or sell the property and both can exit the process without any penalties. This is why you will often find agents and lawyers progressing and being insistent to get to this point as it protects their clients’ interests.
What is in the contract?
As well as all of the terms expressly agreed by both sides, and in some cases, these can be unique, contracts for residential properties have to include the following as a minimum:
The particulars: A physical description of the property and its tenure. If registered, a land registry reference number is used. If it’s a standard urban property a postal address may be enough. If it is unregistered, rural, or a sale of part, a plan may be needed.
The standard conditions of sale: These are the conditions that usually are only important if things go wrong as they govern items such as the deposit, late completion, interest, occupation, encumbrances etc.
The special conditions: These set out the terms on which the seller will sell the property and if any of the standard terms above are varied. Typical examples could be additional items to be purchased, or not selling with vacant possession.
So how do contracts actually exchange?
For the majority of law firms, exchange will take place over the phone. This happens when the buyers and sellers lawyers check that their parts of the contract are identical and agree to exchange during the call. The respective contracts are then posted to their opposite number, but the binding exchange is fixed by the call.
If there is a chain of transactions, the contracts are agreed upon and released down the chain and then confirmed as exchanged one by one, so no one client is left with two properties or none.
Both lawyers will have worked through their client’s instructions and all of the detailed legal work to get the cases ready, and the reward is something that they can both agree on, exchange of contracts.
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If we can help you with any legal matter on your property please don’t hesitate to contact us here.