Until contracts are exchanged, neither the buyer nor seller have any legal obligation to go ahead to buy or sell the property.

It is the solicitors acting on the behalf of the buyer and seller who carry out the exchange of contracts and it is only when this is done that the deal becomes legally binding.

Both the buyer and the seller sign identical contracts.  The solicitors ensure that the contract reflects the property transaction itself, putting into writing who the buyer and seller are, the price agreed and whether certain items are included or excluded in the sale.  The contract also sets out the date for completion.

Once terms of the contract have been agreed, they will be exchanged. At this point both sides are legally bound to go ahead with the deal on the terms agreed and the completion date is set in stone.

When the time comes to exchange contracts, the buyer must put down a deposit. Usually, this is 10% of the purchase price.  Between exchange of contracts and completion, either side will pay significant penalties if they pull out of the deal.  Due to this, it is extremely rare for a buyer or seller to pull out after exchange.  If the buyer pulls out after contracts have been exchanged, they forfeit their deposit.  If it is the seller who pulls out then the buyer can sue them for compensation.

Therefore, once exchange of contracts has occurred it means you can breathe a sigh of relief – you can be pretty sure your house sale will go through.

Ringrose Law can act on your behalf in your sale or purchase. Please contact a member of the Conveyancing team at Ringrose Law. We have offices in Lincoln, Boston, Grantham, Sleaford, Spalding and Newark.

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