Buying
Exchange of Contracts
Definition
The point at which both buyer and seller sign and swap contracts, making the sale legally binding. After exchange, pulling out incurs significant financial penalties (typically losing your deposit). The completion date is set at exchange. In Scotland, the equivalent is the conclusion of missives.
Why it matters
Exchange is the point of no return. Before exchange, either party can walk away (and gazumping is possible). After exchange, pulling out costs you your deposit — typically 10% of the purchase price. Understanding this milestone helps you plan finances and manage risk.
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