What can go wrong after exchange of contracts
After their house has been sold, many customers feel that they can rest assured that they are home and dry with little doubt of anything going wrong. However, there is of course the odd chance that something may go wrong between exchange of contracts and completion. In this article, we have put together scenarios which could occur between exchange and completion in the hope that you will be more aware of these possible situations.
What occurs between exchange and completion?
The penultimate stage of a property sale is the exchange of contracts, which is the point at which both the buyer and seller are committed to the sale and purchase.
At this stage, 10% of the purchase price is paid by the buyer. Neither party may withdraw without having to pay damages to the other party.
Though it is unlikely, things may go wrong between exchange and completion and we want you to be aware of these circumstances.
Things that may go wrong between exchange and completion
1. The mortgage company may withdraw their mortgage offer between exchange and completion
Though this is a rare case, it is possible for a mortgage offer given before exchange to be withdrawn after contracts have been exchanged.
It may be possible to arrange a new mortgage in time to complete but if it happens closer to the completion date, this makes it less likely for a new mortgage offer to be obtained in time.
2. There may be unforeseen circumstances regarding one of the parties between exchange and completion
Many things can happen to either of the parties between exchange and completion which will impact the completion date, including a death or bankruptcy.
If either of these situations occurs, the best solution is to speak with your solicitor and seek their professional advice.
3. A dispute regarding the property may arise prior to completion
It is possible that the seller has not given proper answers to inquiries raised about the house. This could lead to further negotiation about the price of the property.
4. One of the parties may decide not to complete the contract
It is possible that buyers change their mind, which is frequently the case if buyers are based overseas as they are less likely to fully understand the implications of English and Welsh law.
5. The home you are purchasing burns down between exchange and completion
Even if the house you are buying burns down between exchange and completion, you are still legally obliged to go ahead and complete the sale.
The Sale Contract will set out who is responsible for the damage whether the property is damaged from a fire, floor or storm between exchange and completion.
It is recommended to insure the new property on the day of exchange.
6. Further up the conveyancing chain, something may occur which can impact completion date after the exchange has taken place
Upon failure to complete something further up the chain, there may be detrimental impacts further down. Consequently, everyone in the chain will find themselves in breach of contract if they are unable to complete as a result of the failure of one party not completing.
7. You are made redundant after exchange of contracts
In the case that you are made redundant after exchange of contracts, it is necessary that you inform your mortgage lender as this is a material change in financial circumstances.
You will need to find a new job as soon as possible or else you will be at risk of losing your mortgage offer. Seek out advice from your mortgage broker about how you will be able to afford your mortgage payments.
The main point
Overall, it is important to note that most property transactions go through without any of the problems described above. However, it is worth knowing in advance what could potentially go wrong. At FastCash4Houses, we are here to support and advise you every step of the way to buying or selling your property.