Key takeaways
Exchange of contracts is when the property transaction becomes legally binding for both parties
Before exchange, all searches, surveys, and mortgage offers must be completed and approved
The exchange deposit (typically 10%) must be paid, which is lost if the buyer pulls out
Exchange usually happens 7-28 days before completion, though same-day exchange is possible
Building insurance must be in place from the point of exchange, not completion
Exchanging contracts is a huge deal. This is where everything becomes official between you and the other party in your property transaction. You’re both 100% committed and legally bound.
We get that exchange can feel a tad tricky or overwhelming though. There are a few moving parts to navigate here.
But take a deep breath – we’ll walk you through exactly what’s involved so you feel prepared, not panicked. Let’s get into it.
Exchange day is a biggie – this is when everything becomes legally binding between you and the other party. Up until this point, either side could have walked away without (too many) consequences.
Essentially, you’ll both review and sign identical contract agreements, then your conveyancers will formally swap (exchange) them. Once exchanged, you’re legally bound to the property transaction. If someone pulls out now, there are penalties. The seller would have to return the exchange deposit, while the buyer risks losing it completely.
Not only that, walking away post-exchange likely means wasted time and money too.
It’s rare for people to pull out after contracts have been exchanged, so try not to overthink it too much. Typically, exchanging means the time for worry is over, and you can be confident that you are locked into your property transaction.