Legal Question of The Week 12/10/2018
I have signed the Contract – does this mean that we have bought the property?
No, you are not committed to purchase a property until the Contracts have been formerly exchanged, using a Law Society Formula.
When you are a Seller of a property, you are keen to get the sale completed as quickly as possible. Your lawyer will draw up the Contract for the sale of the property, incorporating the full names of the Buyer and the Seller along with the correct sale price agreed. Any items that are to be sold separately, such as furniture that the Buyers wish to purchase, will also be added to the Contract under “Chattels” and collected as part of the terms of the transaction.
As a Buyer there are a few more things that the Lawyer must do before being able to commit their Client to the transaction, which include receiving the searches, survey, mortgage conditions raising and receiving replies to any enquiries, amongst other things. When all points are satisfied, a Report will be prepared for the Buyer, by the Lawyer, to advise him about the Title, the boundaries of the property, any extensions or other works that may have required Planning which have come to light, either as part of the surveyors notes, or revealed in the Searches.
Whilst the Contract may have been signed, in advance, you are not committed to the purchase as a Buyer, or the sale as a Seller, until all parties are agreed that they are happy with the documents provided, and the responses to any enquiries that have been raised. The Buyer must have their funds in place for the deposit to be paid over on exchange of contracts and the mortgage agreed in writing, to be able to go forward to complete the purchase.
The lawyers will speak with their Client to discuss whether they are happy to continue with the transaction and to agree a date for completion. When everyone is happy to continue, the lawyers will then contact each other to formerly exchange contracts, using a Law Society Formula, which will then commit the Buyer and the Seller to the transaction, with the completion to take place on the date fixed in the Contract, previously agreed by all parties.
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