Exchange of contracts
Exchange of contracts is the point when a property sale becomes legally binding in England and Wales. The buyer pays a deposit and a completion date is fixed.
Exchange of contracts is the moment a property sale in England and Wales becomes legally binding. Until then, buyer and seller can both pull out. After it, neither can usually withdraw without paying compensation.
It comes near the end of conveyancing, once both sides are happy with the contract, the searches and the buyer's mortgage offer.
How exchange works
The buyer and seller each sign an identical copy of the contract. Their conveyancers then swap the signed copies, usually by agreement over the phone, and the contract takes effect at that moment.
At exchange the buyer pays a deposit, usually 10% of the price, although a smaller deposit such as 5% can be agreed. The contract also fixes the completion date, which is the day the rest of the money is paid and the keys are handed over.
What changes after exchange
Before exchange, a seller can accept a higher offer or a buyer can ask for a lower price, known as gazumping and gazundering. After exchange, the price and the date are fixed.
If the buyer fails to complete, they can lose their deposit and may face a claim from the seller. If the seller fails to complete, the buyer can take legal action. Buyers are usually asked by their lender to have buildings insurance in place from exchange.
Exchange in a chain
Where several sales depend on each other in a property chain, contracts are usually exchanged on the same day all the way along. This makes sure nobody is committed to buying without also being committed to selling.
The gap between exchange and completion is often one to two weeks, but it can be the same day or longer, as agreed by everyone involved.
Exchange and sold prices
The price is fixed at exchange, but it is not public yet. It only goes into Price Paid Data after completion and registration with HM Land Registry, so the recorded date is the completion date. Our guide on why sold prices take months to appear explains the timing.
| Effect | The sale becomes legally binding |
| Deposit | Usually 10% of the price, sometimes less by agreement |
| Completion date | Fixed in the contract at exchange |
| Date in Price Paid Data | The completion date, not the exchange date |
Related terms
Completion · Conveyancing · Sold subject to contract · Property chain · Gazumping · Price Paid Data