Property Practice - Exchange of Contracts Flashcards
Pre-Exchange Tasks: Seller’s Solicitor
- Obtain redemption figure for existing mortgage
- Agree form of contract with buyer’s solicitor
Pre-Exchange Tasks: Buyer’s Solicitor
- Report to buyer
- Confirm buyer wishes to proceed
- Confirm buyer’s financing
Synchronisation
All parties in chain agreeing the same completion date
On exchange
Transaction becomes legally binding
Methods of Exchange
- Person
- Post
- Phone
Exchange in Person
Solicitors meet face to face and exchange in person
Contract becomes binding once solicitors agree that in person exchanged has happened
Impractical and rare
Exchange by Post
Solicitors post their client’s signed part of the contract to each other
Technically exchange takes place when seller’s part posted to buyer’s solicitor (not used in practice due to lack of certainty but may come up in exam)
Exchange by Phone
Exchange date is the date of the conversation
Formulae for Exchange of Contracts used for exchange by phone:
Formula A, Formula B and Formula C
Formula A
One solicitor (usually seller’s) holds both signed parts of contract
Buyer’s signed contract and deposit cheque sent to seller’s solicitor in advance. Seller’s solicitor confirms over the phone that both parts of the contract are the same.
E.g. buyer’s solicitor is going to be out of the office and gives seller’s solicitor their client’s part of the contract in advance
Formula B
Each solicitor holds own client’s signed part of contract
Each solicitor will confirm contents of contract they hold which is signed by their client
Solicitor will date their part of contract and insert completion date and send their client’s signed part of contract to the other solicitor
Formula C
Used if chain of transactions
Each solicitor holds their client’s signed part of the contract
Two phone calls: first confirms solicitors are ready to exchange and the second confirms actual exchange
Memorandum of Exchange
Immediately after exchange solicitors required to make MoE
Records important details about exchange: name of solicitors, date and time of exchange, formula used, completion date and amount of any deposit paid by the buyer
Protection of Contract by Registration
If there will be considerable time between exchange and completion buyer’s solicitor may wish to protect client’s contract by registering an estate contract
Registered title: estate contract protected by entering a notice on charges register
Unregistered title: estate contract protected by registering a C(iv) land charge against seller’s full name
Puts world on notice that seller has agreed to sell the land in question
Varying term of contract
Exchange new contracts with the other side’s solicitor
