This is the point in a property transaction when the parties become contractually bound to buy and sell the particular property. Once the contracts are exchanged, the parties cannot withdraw from the transaction without legal ramifications and the buyer could risk losing his deposit. The seller could face legal action from the buyer to enforce the contract.
Exchange of contracts takes place when the buyer’s solicitor has carried out all their checks on the title to the property and if required the buyer has a valid mortgage offer. If the buyer has a linked sale transaction, that that transaction is also ready to proceed and the same if the seller has a linked purchase transaction.
The seller’s and the buyer’s solicitors will agree to “exchange” contracts, usually using certain agreed wording over the telephone and the contract will become binding. At that point, the completion date will be finalised and that will be the date the seller must move out of the property and the buyer on paying the balance of the purchase price may move in.