Once a contract is exchanged it becomes binding on both parties, and they shall not be able to rescind without sufficient reason or incurring liability.
After the beneficial interest on the property is transferred to the buyer, he becomes entitled to any benefits arising from the property. He is also liable for risks or loss associated with the property. Thus, it makes sense to minimise loss by insuring the property as soon as it is purchased.
Although the beneficial interest is transferred to the buyer, the seller retains the title until the transaction is complete. He also retains his right to stay in the property or to receive rent from it. Expenses such as community charges, business rates etc. should also be borne by the seller. It is also his duty to ensure that the property is maintained, and shall be liable for the damages caused to the property due to neglect or misuse. Such a duty shall continue until the time that the property is in possession of the seller, even if he vacates the property.
Immediately after exchange
This section explains the consequences of exchange and the steps to be taken by the parties to the contract to ensure a speedy completion.
The seller
Upon exchange of documents, the seller’s conveyancing solicitor should inform his client as well as the selling agent of the seller that the exchange has taken place. And when such exchange takes place over phone the copy of the signed contract should be sent to the buyer’s solicitor so that all pending formalities pertaining to the contract are undertaken. But before exchanging, he should ensure that the contract documents are dated and contains all details about the completion date. Deposits if any, should be paid into the seller’s interest-bearing account.
The buyer:
Upon exchange, the buyer’s conveyancing lawyer should inform his client that exchange has taken place and should also make a note of the completion date in his diary. Documents such as signed contract, deposit cheque, etc. should then be sent to the seller’s conveyancing solicitor after checking if the contract is dated and contains the agreed date for completion. This is sometimes done via registered post. Finally, the conveyancing solicitor should take steps to arrange for the insurance of the property.
Photo courtesy: Nic McPhee
