Upon exchange of contracts - when a binding agreement to sell the property arises - a deposit will be payable by the buyer which, unless you are buying another property, will be held by us as “stakeholders” – i.e., on behalf of both yourself and the buyer. The amount of the deposit offered by the buyer may well depend on the amount of mortgage advance which he or she is obtaining. If, for example, this is a 95% mortgage, only 5% will be offered. You, as the seller, can insist upon payment of the full 10% deposit but this may sometimes meet with resistance, particularly if this means the buyer having to borrow money.
Should the buyer fail to complete the purchase, having previously exchanged, you as the seller can keep the deposit actually paid and also sue the buyer for the balance of 10% and for additional losses incurred. The risk to you in accepting a low deposit is that the buyer might have insufficient assets to satisfy a court judgement for the additional money.
Upon exchange of contracts you and the buyer are, for the first time, committed by law to proceed with the sale/purchase. If there is a ‘chain’ of transactions, the same completion date will normally have to be agreed by all parties and the best procedure is for the parties to speak direct to each other to agree this or to ask the estate agents to do so – all lawyers can do is pass on their client’s wishes and using only that route may slow things down.
Exchange of contracts does not in itself require you to come into the office again. It is normally done over the telephone between the buyer’s and seller’s lawyers, who give each other professional undertakings to send to each other their client’s signed contract (and the deposit cheque in the case of the buyer). In order for us to exchange on your behalf in this matter, we need your irrevocable authority to do so.
This means that, once you have signed the contract and we have dealt with any outstanding matters specifically discussed with you (for example, agreeing a particular completion date), we can give the necessary undertakings (which are binding upon the firm) and start the process of exchanging contracts without the risk that you will change your mind before the exchange process is complete. By signing the copy instruction letter, you are giving that authority to us.
Although it is theoretically possible to exchange contracts and complete on the same day, in practice, particularly if there is a chain of transactions, it is better to have a minimum of a few days between exchange and completion to avoid uncertainty and stress, and someone in the chain will probably insist on this.
Before completion, the buyer’s solicitor will draft the transfer deed, which we will send to you for signature.
Following exchange of contracts we will supply to you a statement showing the final sum due to you on completion, taking into account the mortgage loan (if any) which needs to be repaid. Very often this has to be done (or it is cheaper if it is done) by means of a telegraphic transfer, for which a charge of £48.00 (inc VAT) will be made. We shall also settle the estate agent’s charges on completion.
The money due to you will be sent to you as soon as possible following completion, usually on the day itself. If you wish the money to be telegraphed to an account so that it is immediately cleared funds, we can do so upon payment of a telegraphic transfer charge of £48.00, along with signed and written instructions as to where to send the funds.
