When Contracts Exchange in any property transaction there is a legally binding agreement. If either side does not honour their part of the agreement there can be dire financial consequences. We have previously detailed the processby which Contracts Exchange, we have also made the point that cases where things go wrong after the exchange has taken place are very few and far between. This certainty is much sought after, but elusive. Judging from the queries that we receive there is still some considerable confusion among those involved in the Conveyancing process about why contracts exchange at a particular time and, perhaps more importantly, why they do not. For a brief overview of what Solicitors actually do in the Conveyancing Process please click here.
Contracts Exchange – Myths
When we read many of the posts that appear on this and other websites it is quite clear that some myths about the reasons why contracts exchange, or do not, have sprung up.
The most common myth appears to be that there is some conspiracy among Solicitors involved in a Conveyancing Chain, at very least, to delay contracts exchange. This is a completely illogical suggestion. First of all when there is a delay in contracts exchange worried Clients quite rightly want to know what is going on. That involves telephoning Solicitors, often on a frequent basis. This produces more work for the Solicitors. Bearing in mind that almost inevitably these days the Solicitor will be working on a fixed fee the last thing he or she will want to do is generate extra work. More importantly, the Solicitor is not going to be paid until completion takes place. It is therefore in the Solicitors interests to have both contracts exchange and completion as soon as reasonably practicable.
Similarly Estate Agents almost always only become entitled to their Commission when contracts exchange. It is therefore also in their interests to try to arrange this as quickly as possible. Accordingly, none of the professionals involved in the transaction will deliberately tried to delay matters, unless it is in the best interests of their client to do so.
The second myth that we have come across is the suggestion that contracts exchange can take place even though one or more parties in the Conveyancing Chain are not ready. There seems to be an idea that those parties can “catch up” in the period between contracts exchange and completion. In reality, however because most people are both buying and selling and cannot risk of being in a position where either they have two properties or none at all, contracts exchange will not happen until the whole of the Conveyancing Chain is in a position to exchange.
Contracts Exchange – Common Causes of Delay
The most common cause of delay in Contracts Exchange is quite simply because one of the parties in the Conveyancing Chain is not ready. They are still awaiting their mortgage offer, they need the results of a search, there is an outstanding enquiry that needs to be answered. Any of these things will mean that contracts exchange cannot take place.
Sometimes individuals are quite open about their position – and they instruct their Solicitor to be equally frank. Undoubtedly this is the most helpful policy, because everyone knows where they stand.
For a host of reasons however some individuals do not wish to the other parties in the Conveyancing Chain to know what is going on. It may be that they are concerned that if the position does become known one or more of the others will withdraw from the transaction. Alternatively they may worry that they will come under pressure to exchange if the real cause of the delay is revealed or they may simply value their privacy.
The fact is that Solicitors are obliged to follow their Clients Instructions. While they will not tell untruths on behalf of their Clients they will take any reasonable step that they can to delay matters if that is what their Client wants. They may also simply avoid answering questions at all, on the basis that in this way they are not seen to be in any sense misleading anyone.
If the chain appears to be ready for Contracts Exchange and one of the Solicitors in the chain suddenly becomes impossible to contact for more than a day or so it is usually the case that his or her Client is not actually ready. Whether the reason is serious, or one that can be overcome quickly is the crucial question, of course.
This can be extremely frustrating for others in the Conveyancing Chain. So far as they are concerned (and this is very often reinforced by the Estate Agents) everyone in the Chain is ready for Contracts Exchange. The only “explanation” for the failure to exchange therefore is that it is the Solicitors fault. For the reasons that we have explained above this will not be the case.
We have also received reports that property “hotspots” such as London are seeing quite considerable delays in mortgage valuations and surveys being undertaken. This is quite simply because there are not enough professionals on the ground. You may not be involved in a transaction in one of the areas, but someone in the chain may be. If so expect delays.
Contracts Exchange – Patience is the Key
The reality is in most cases contracts do exchange and the transactions move to satisfactory completion. Getting irate, threatening to withdraw from the transaction or change the terms upon which you are prepared to buy or sell is most unlikely to produce any constructive result. Remaining calm and patient, we are afraid, is the only thing that you can do.
Exchange Can Only Happen When Everyone is ready
When contracts are exchanged a Transfer Document will be needed.needed. For a brief description of this document please click here