Pre-Exchange & Exchange

Question 1

What are the 4 key steps the BUYER’S SOLICITOR must take pre-exchange?

Answer 1

(1) REPORT TO CLIENT - results of (a) Title Investigation (b) Searches & enquiries
(2) DEPOSIT - cleared funds deposited in buyer’s client account (to send to seller at exchange)
(3) MORTGAGE - formal offer of finance has been received and accepted & buyer has sufficient funds to proceed to completion
(4) CONTRACT - buyer signs their part of the contract

Question 2

What are the 2 key steps the SELLER’s SOLICITOR must take pre-exchange?

Answer 2

(1) PREPARE CONTRACT - (includes TITLTE GUARANTEE - (I.e. covenant from seller to buyer - right to sell property) + SELLER Signs their part
(2) CURRENT MORTGAGE - get a provisional ‘redemption figure’ to check proceeds of sale will be enough to discharge current mortgage

Question 3

What are the 3 methods of exchange of contracts? (clue 3Ps)

Answer 3

(1) In PERSON
(2) By POST
(3) By PHONE (Formula A, B or C)

Question 4

When is Law Society Formula A used?

Answer 4

When one solicitor holds both the buyer and seller’s parts of the signed contract (i.e solicitor REPRESENTS BOTH BUYER & SELLER)

Question 5

When is Law Society Formula B used?

Answer 5

Each solicitor holds their own client’s signed part of the contract - MOST COMMON

Question 6

When is Law Society Formula C used?

Answer 6

Chain of residential property transactions

Question 7

In Law Society Formula B, what are the 3 main steps taken by BOTH SOLICITOR?

(1) Confirm…
(2) Agree & insert…
(3) Undertakes to:
(a)
(b)
(c)
(d)

Answer 7

(1) Confirm they hold their CLIENT’S SIGNED PART OF CONTRACT
(2) Agree & insert COMPLETION DATE

(3) Undertakes:
(a) To hold their client’s part of the contract to the order of the other solicitor (EXCHANGE OCCURS HERE)
(b) Insert DATE OF EXCHANGE (that day)
(c) Send CONTRACT (that day) (by 1st class post, DX or by hand)
(d) Send DEPOSIT (buyer-solicitor only)

Question 8

What are the 3 main consequences of Exchange:

Answer 8

(1) Buyer gains EQUITABLE TITLE to property (seller keeps LEGAL TITLE)

(2) RISK of damage / loss transferred to buyer

(3) Seller remains in PHYSICAL OCCUPATION / POSSESSION (unless buyer occupies as a licensee)