Exchange is when the move becomes legally binding and the completion date is fixed. Completion is when the money changes hands and you get the keys. There's usually a week or two between them, though they can happen on the same day.
What exchange of contracts means
Up to this point, nobody is tied in. The buyer and seller have each signed a copy of the contract, but those signed copies sit with their conveyancers. At exchange, the conveyancers swap them, and from that moment both sides are legally bound to go ahead.
These days nobody posts a contract across town and waits. Exchange usually happens over the phone. The conveyancers on each side of the chain read out the agreed details, confirm everything matches, and agree that contracts are exchanged. They follow a set script written by the Law Society, called the Law Society formulae, so that everyone is bound at the same moment and nobody in the chain is left exposed.
Before exchange can happen, the buyer's conveyancer needs the searches back, the enquiries answered and the mortgage offer in place. Our guide to how long conveyancing takes walks through those stages.
At exchange
You're committed.
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The deposit is paid
It's commonly 10% of the price, but a lower amount is often agreed, especially with a smaller mortgage deposit. It has to be in your conveyancer's account before exchange. If you're buying and selling, the deposit from your sale can often be passed up the chain.
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Pulling out gets expensive
A buyer who backs out can lose their deposit and be liable for the seller's further losses. A seller who backs out can be sued for the buyer's losses. It's rare for exactly that reason.
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Buildings insurance starts
Buying? You're usually responsible for insuring the building from exchange, not completion. If the house burned down the day after, you'd still have to buy it. Most lenders insist on cover from that day.
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The completion date is fixed
Everyone in the chain agrees it beforehand, and once contracts are exchanged it can't change without everyone's agreement. This is the date to book your removals for.
At completion
The home changes hands.
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The lender releases the mortgage money
It goes to the buyer's conveyancer, usually requested a few days ahead so it's ready to go.
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The money moves to the seller's side
The buyer's conveyancer sends the purchase money to the seller's conveyancer. In a chain, it moves from one conveyancer to the next until it reaches the top.
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The seller's conveyancer confirms it's arrived
That moment is completion.
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The keys are released
The seller's conveyancer tells the estate agent, and the estate agent hands the keys to the buyer.
Completion usually happens some time from late morning to early afternoon, but nobody can promise an exact time. A long chain, or a bank transfer that takes a while to arrive, can push it later. Sellers usually need to have moved out by an agreed time, so it's worth keeping the day flexible.
The gap between exchange and completion
The gap is commonly 1 to 2 weeks. That gives everyone time to book removals, give notice on a tenancy, and for the buyer's conveyancer to request the mortgage money from the lender.
Sometimes exchange and completion happen on the same day. This is called simultaneous exchange and completion. It can suit a cash buyer or someone in a hurry. The risk is that until contracts are exchanged, nobody is committed. If someone pulls out that morning, you could have a removal van packed and nowhere to go. We'll always explain that risk before you agree to it.
After completion
You've got the keys, but your conveyancer still has some work to do.
- Stamp Duty. If you're buying, a Stamp Duty Land Tax return has to be sent to HMRC, and any tax paid, within 14 days of completion. Your conveyancer normally does this for you. You can read more about it on the HMRC Stamp Duty Land Tax page. In Wales, the equivalent is Land Transaction Tax, which has its own deadline.
- Registration. The buyer's conveyancer registers you as the new owner with HM Land Registry, along with your lender's mortgage if you have one.
- The seller's mortgage. If you're selling, your conveyancer pays off your old mortgage from the sale money on the day, and sends you what's left.
You get a named conveyancer and WhatsApp updates, so you'll know the moment contracts are exchanged and the moment you've completed. If a chain wobbles before exchange, here's what happens when a chain breaks.
