Exchange and completion day: what happens and when

Two moments that matter

Exchange of contracts and completion are the last two milestones in buying or selling a home. Exchange is the point where the deal becomes legally binding. Completion is the day the money is paid, ownership passes to the buyer and the keys are handed over.

There is often a week or two between exchange and completion, although it can be longer, and occasionally both happen on the same day. Knowing what each involves helps you plan your money and your move. This guide describes England and Wales. Northern Ireland works in a similar way.

What exchange means legally

Before exchange, either side can usually walk away without having to pay the other's costs. At exchange, the conveyancers (the solicitors or licensed conveyancers acting for each side) confirm that each holds a contract signed by their client, agree the completion date and exchange by phone using standard wording set by the Law Society. The signed contracts are then sent to each other.

From that moment you are both legally bound. If a buyer fails to complete, they risk losing their deposit and facing a claim for further losses, and a seller who fails to complete can face a claim from the buyer. In a chain (a series of linked sales and purchases), everyone usually exchanges on the same day, so that nobody is committed to a sale without their purchase, or the other way round.

The deposit

The buyer pays a deposit to the seller's conveyancer at exchange, commonly 10% of the price, although a lower figure such as 5% is often agreed. For example, on a £300,000 purchase, a 10% deposit would be £30,000 and a 5% deposit £15,000. This contract deposit usually comes from the money you are putting in yourself, not from the mortgage, which is released only at completion.

The money must reach your conveyancer in cleared funds (money that has fully arrived and can be used) before exchange, so do not leave the transfer to the last day. If family members are helping, your conveyancer will need evidence of where the money comes from and may ask them to sign a form, as the guide to gifted deposits explains. In a chain, the deposit you receive on your sale can often be used towards the deposit on your purchase.

Agreeing the completion date

The completion date is agreed before exchange and written into the contract. Everyone in the chain has to accept it, so it is often a compromise between buyers, sellers, lenders and removal firms. Points to weigh up include:

• how much notice your lender needs to send the mortgage money, often several working days
• when your mortgage offer expires, and the notice period on any rented home you are leaving
• whether removal firms are available, especially at busy times such as the end of the month
• leaving a buffer, as Fridays and the days before bank holidays are popular and banks can be busier

Do not book removals or give notice on a tenancy until your conveyancer confirms exchange, unless you are prepared for the date to change. Your conveyancer will tell you as soon as the date is fixed.

After exchange: what to do and what to avoid

Exchange is a firm commitment, so treat the time up to completion with care. These are the main points for buyers and sellers.

• Buyers: arrange buildings insurance from exchange if you are buying a house, because you are committed from that point and your lender will want cover in place by completion at the latest
• Buyers: do not take on new credit, change jobs or make other big financial changes without speaking to your lender or broker first, as a lender can withdraw an offer in some circumstances before the money is released
• Buyers: send the balance of your money to your conveyancer in good time, usually a few days before completion
• Sellers: keep your own buildings insurance in place until completion, and leave the property in the condition it was in at exchange
• Sellers: do not remove anything listed as included on the fittings and contents form, the seller's list of what stays with the property

Completion day, hour by hour

Every completion runs to its own timetable, but a typical day might look like this. The times are only an illustration.

• Before the day: your lender sends the mortgage money to your conveyancer, often the day before or that morning, and your own funds are already there
• 9am to 10am: your conveyancer sends the purchase money through CHAPS, the banking system for same-day high-value payments
• Mid-morning to early afternoon: the money arrives in the seller's conveyancer's account, which can take a few hours when chains are long or banks are busy
• Once the money arrives: the seller's conveyancer confirms completion and tells the estate agent to release the keys
• The same day: the seller's conveyancer pays off the seller's mortgage and the estate agent, then passes the balance to the seller or on to their own purchase
• Early afternoon: you collect the keys from the agent and can start moving in

The contract usually sets a latest time for the money to arrive, often 1pm or 2pm, and the seller must leave the property empty by completion unless something else has been agreed. In a chain the money moves link by link, so a delay at one link holds up everyone further up.

Common delays and what happens if completion is late

Completion usually goes ahead as planned, but delays do happen. Common causes include mortgage money arriving late because the lender was asked too late, a missing signed document, a link in the chain waiting for its own funds and banks handling a high volume of payments. A seller who has not finished moving out can also hold up the keys.

If completion is late, the contract usually requires the party at fault to pay compensation, often worked out as interest on the money owed. If the delay continues, the other side can serve a notice to complete, a formal demand to complete within a fixed time, which under the standard terms is usually ten working days. Failing to complete after that can mean losing the deposit or facing a claim, which is why conveyancers work hard to keep to the agreed date.

After completion

Your conveyancer's work does not stop when you get the keys. After completion, the buyer's conveyancer will usually:

• submit the property tax return and pay any tax from the money you provided: Stamp Duty Land Tax in England and Northern Ireland within 14 days, or Land Transaction Tax in Wales within 30 days
• apply to register you as the new owner, at HM Land Registry in England and Wales (within the 30 working days of protection given by a search made just before completion), or Land and Property Services in Northern Ireland
• check that the seller's mortgage has been paid off so it can be removed from the register
• send you a completion statement, a breakdown of where the money went, and a copy of the updated register once registration is finished

Registration can take some time, but the priority search protects the application in the meantime. You can also sign up to HM Land Registry's free Property Alert service, which alerts you if someone applies to change the register for your property.

Protect yourself from payment fraud

Property transactions attract criminals, because large sums move on a predictable timetable. A common trick is an email that appears to come from your conveyancer, saying its bank details have changed. Money sent to a criminal's account may be impossible to recover.

• never trust bank details sent or changed by email, text or messaging app
• before sending money, call your conveyancer on a number you already know, such as the one in its client care letter, and confirm the details
• be wary of any message pressing you to pay urgently or claiming you will lose the property
• if your conveyancer suggests sending a small test payment first, wait for confirmation that it arrived before sending the rest
• if you think something is wrong, call your bank immediately and then your conveyancer

Keyfolio does not hold client money, so it will never ask you to send purchase money to it. Your private page shows your law firm's contact details and a fraud warning, to help you check who you are dealing with.

Next steps

Before exchange, make sure you know exactly how much money you need and when it is due. The stamp duty calculator and the moving costs tool can help you budget, and if you have not instructed anyone yet you can get an instant conveyancing quote.