Chapter 8: Exchange of contracts

Question 1

At what point in the conveyancing transaction does the matter become legally binding?

Answer 1

On exchange of contracts.

Question 2

When will transactions need to be synchronised?

Answer 2

When the client has a related sale and purchase

Question 3

What happens on exchange if the conveyance is for a new lease?

Answer 3

• The buyer agrees to take the lease in the form of an agreed draft.
• The landlord agrees to grant the lease in the form of the agreed draft.

Question 4

What are the three methods of exchange?

Answer 4

1. Personal attendance
2. Post
3. Phone

Question 5

What is Formula A of the Law Society’s formulae for exchange of contracts?

Answer 5

• One solicitor (usually the seller) holds both signed parts of the contract. The buyer will have already sent the signed contract and deposit cheque.
• The seller’s solicitor confirms that both parts are the same via telephone and inserts the exchange and completion dates on both copies.

Rare, but used when buyer’s solicitor knows that they will be out of office on day exchange is due to occur.

Question 6

What is Formula B of the Law Society’s formulae for exchange of contracts?

Answer 6

• Each solicitor holds own client’s signed contract.
• Solicitors confirm whilst on phone that their versions are the same.
• After exchange, each solicitor sends their copy of contract to the other. The buyer’s solicitor sends the agreed deposit funds to the seller’s solicitor.

Most common method.

Question 7

What is Formula C of the Law Society’s formulae for exchange of contracts?

Answer 7

Two phone calls made:

1. To confirm solicitors ready
2. To confirm actual exchange

Used in chain of transactions.

Question 8

If the completion date is more than a couple of weeks after exchange, what should the buyer’s solicitor consider doing to protect buyer?

Answer 8

Registered title - register estate contract on charges register

Unregistered title - C(iv) land charge against seller’s name

Question 9

After exchange, what form of record must be produced by both solicitors?

Answer 9

Memorandum of exchange

Question 10

What should parties do if they wish to vary contract after exchange?

Answer 10

Exchage contracts again with variation included in new contract