What is exchange of contracts?

Exchange of contracts is the moment in a property transaction when both buyer and seller sign their respective contracts and swap them with each other. At this point, the buyer pays a deposit (typically 5 to 20 percent of the purchase price) to the seller's solicitor, and the sale becomes legally binding on both parties. From exchange onwards, either party can face financial penalties if they withdraw without good cause.

This stage is distinct from completion, which is when the remaining balance is paid, keys are handed over, and ownership formally transfers. Between exchange and completion there is usually a gap of one to three months, though this period can vary depending on the circumstances of the sale.

Exchange is significant because it creates a point of no return in the transaction. Before exchange, either party can pull out, though the buyer may lose any survey or legal costs already incurred. After exchange, withdrawing is far more serious: the buyer stands to lose their deposit and may face legal action from the seller for damages. The residential sales agents and solicitors involved will ensure all conditions in the contract are met before this step and will advise clients on the implications of proceeding.