What is exchange of contracts?

"Exchange of contracts" is the legally binding moment in a property transaction. Here's how it typically works:

The actual exchange of contracts typically involves both parties' solicitors reading out the terms of the contract over the phone to ensure they match. The contracts are then physically or electronically exchanged, and this exchange is usually done simultaneously. The buyer will often provide a deposit at this stage, typically around 5-10% of the purchase price, which is held in a designated account by the seller's solicitor.

Once the contracts are exchanged, the transaction becomes legally binding. Neither party can withdraw from the sale without facing financial consequences. The completion date, usually set a few weeks after the exchange, is agreed upon during this process.

It's important to note that the specifics of the process may vary slightly depending on the circumstances and the parties involved, but the exchange of contracts is a pivotal moment in the property buying and selling process, marking the transition from a tentative agreement to a legally binding commitment.