This is the crucial step. It is the point when both sides are committed and,
in effect, the deal is done. All the earlier negotiations will have been conducted
‘subject to contract’ and are
now unimportant since the main terms will be incorporated in this legal agreement.
The buyer is then bound to buy the property while the seller is equally bound
to sell.
Contracts for sales arranged by private treaty are not initially
public documents. After completion, when the transaction has been recorded at
the Land Registry, information about the price paid and the legal mortgage charges
are technically in the public domain. Copies are then available on payment of
the appropriate nominal fee.
In an auction,
exchange of contracts technically occurs when the auctioneer’s hammer falls
and the highest bid is then accepted, subject to the general conditions set out
in the auction particulars and any special conditions relating to individual lots.
In that case, of course, all the terms, and the price paid, are in the public
domain.
In the case of private treaty negotiations the actual exchange
is normally instigated by the purchaser’s solicitors sending a copy of the
contract signed by his client to the seller’s solicitor together with the
agreed deposit money. The solicitor will check that the terms match exactly with
the copy he has had signed by his client. Technically the moment of exchange occurs
when this second contract is put into the post. Where several sales are involved,
simultaneous exchange of contracts is usually arranged by telephone, with all
solicitors involved giving the appropriate undertakings to the others.
When
your solicitor sends you the contract for signature, don’t waste any time
– read it, sign it, and take it or send it back to him immediately. Time
may well be of the essence.
