Clients often ask me why exchange and completion can not occur simultaneously. How can I explain why there needs to be such a gap between the two in simple terms without confusing them?
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Eddie says: Conveyancing, even at its simplest, can prove quite a tricky process to explain. The first thing that you need to understand is that, with at least two parties involved – and sometimes more – there are different agendas at play which affect many aspects of the transaction. Agreeing a date for completion is an area where differences of opinion can often arise, so, in most cases except new builds, this needs to be discussed and a completion date agreed in order to exchange contracts.
Keeping it realistic
The exchange day is when contracts between buyer and seller are signed and swapped by the solicitors, so the sale becomes certain. After this point, if either party wants to pull out, they must compensate the other. The completion date is then specified in the contract between the buyer and seller and is when the buyer gets actual possession of the property. Any moving date that is suggested or agreed with other buyers or sellers is not guaranteed until contracts have been exchanged.
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Explain to your client that a realistic completion date is vital as they should not exchange contracts without being sure that the date for completion can be met. If, for example, there is too short a time span to confidently complete the transaction, then alternative dates should be discussed. In the same way, it is important to bear in mind that lenders differ in the minimum notice they need and also in what documentation they require to release funds. Such issues should be taken into account to avoid the disappointment and animosity that can arise if an unrealistic completion date is set.
Outstanding conditions
Any number of outstanding conditions could rear their heads at any time – experience will tell any solicitor this. The fact that a client says that they have or have not done something can not always be relied upon, as they may think they have completed part of the process correctly without actually having done so. For example, evidence of the client’s divorce may be a condition of the mortgage. Only the client will have the necessary documentation to prove this and the solicitor must check that what has been sent through is exactly what is required by the lender. The process will quickly grind to a halt if something like this is still outstanding. Any completion date that is suggested by the client first of all needs to be agreed with the seller and then the solicitor will check it is viable.
Complex
It is clear that the seemingly simple step of agreeing a completion date can be quite complex, and this should go some way to illustrating how trying to set up a simultaneous exchange and completion date could turn into a truly nightmare scenario.
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This might happen, say, if the parties wanted to move on a particular date and, as that date drew nearer, either their own solicitor or someone else in the chain was not ready to exchange. Moving on the ‘agreed’ date becomes an unattainable objective but the parties involved still want to press ahead in the hope that it will happen as originally planned.
Dealing with outstanding issues in the days leading up to this date can take its toll, when all that is needed is a little extra time. Frantically trying to push things through at the last minute simply makes everyones’ stress levels rise. At this stage, going as far as booking removal vans, taking time off work, loading vans and turning up to collect the keys is not advisable unless it is absolutely certain that everything has gone through as planned. If the client arrives at the estate agents to pick up the keys and their solicitor hasn’t paid the sellers’ solicitors any money, the keys simply will not be handed over to them.
The money may not have gone through for a number of reasons; generally, there has been no exchange because the solicitor couldn’t get the money from the lender because of some outstanding condition, or it may be that a family member contributing to the cost of the house has not sent the money they were supposed to.
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Solicitors will always try to accommodate their clients’ wishes but they understand that a reasonable amount of time must be left between exchange and completion. I would recommend 10 to 14 days as a general rule.
In short, there should be no uncertainty about moving dates and, most importantly, clients should be advised to avoid simultaneous exchange and completions at all costs.
