Exchange of contracts
Exchange of contracts is the point in the conveyancing process when the sale agreement becomes legally binding.
Prior to exchange both the buyer and seller can withdraw from the process without penalty.
There is usually a week or two between exchange and completion, although the two events can occur simultaneously.
At the point of exchange the contract of sale is signed by both parties and the deposit (usually 10%) is paid to the buyer. A completion date is then agreed.
If the buyer decides to pull out after exchange the they will lose their deposit and may be sued by the seller for any other losses.
If the seller decides to pull out after exchange then the buyer can take legal action against the seller to recover any losses and potentially force the seller to vacate the property.
Gaynor Haliday, Legal researcher
About the author
Gaynor Haliday is an experienced legal researcher and published author. She has had numerous articles published in the press and is a legal industry commentator.