Can I Exchange and Complete on the Same Day?
16 September 2020
The short answer is yes it is possible, but is it worth the risk and stress of doing so? There are some transactions where it would be easier to exchange and complete on the same day, but for others it could be difficult or impractical, if not impossible.
What are the risks?
If you are exchanging and completing on the same day you will not have a binding contract in place until the day you are due to move in.
Under property law in England and Wales, a buyer or seller can pull out of the transaction right up until the point of exchange of contracts. If you don't exchange contracts until completion day, then this means you could be caught out. You could face a buyer/seller who throws in an unexpected demand leaving you with little time to negotiate, or worst case scenario they could simply pull out altogether.
There are many things to consider when moving house. Would you be willing to risk the completion not going ahead having done all the packing, hired a removal van, cleared the property of rubbish, sent in the meter readings, and everything else? If you had prepared everything for your move only for completion not to go ahead, it could be a very stressful and expensive day. This is one of the risks of exchanging and completing on the same day.
Buying with a mortgage
If you are buying a property with a mortgage is may not be possible to exchange and complete on the same day. This is because most lenders will insist on a notice period before they will send over the money for completion, which is usually 5 working days. Funds are usually requested from the lender on the day that contracts are exchanged.
If the completion does not go ahead on the planned day then the money has to be returned to the lender and there will be transfer fees for this. You are responsible for paying interest on the mortgage from the day the money is released, even if your property purchase doesn't complete.
If you are in a property chain you will need the informal agreement of everyone else in the chain to exchange and complete simultaneously. Otherwise you could run the risk of selling your home first then failing to complete on the purchase in time, because of the number of other transactions in the in the chain. This could effectively leave you homeless.
If you had already exchanged contracts ahead of moving day, then you have the reassurance that everyone is legally committed to completing on that day.
Moving your belongings
If you have some time between exchange and completion, you can arrange removals knowing that the buyer/seller is contractually bound to complete on that day. But if you're exchanging and completing on the same day, you'll have to arrange removals without being in a legally binding contract, meaning you could end up not moving on that day.
You could end up emptying one property and finding yourself unable to load your belongings into the other. Add to this the cost of the removal and possible storage costs while you wait for your purchase to complete, and it could be an expensive risk to take.
Giving notice to landlords
If you are in rented accommodation you will most likely need to give notice to the landlord of your intention to leave. If you can't balance the dates, you could have an overlap where you end up paying for rent and a mortgage at the same time.
Also consider whether there are any parking restrictions on the street. Some Councils will need to provide permits for you to park up and unload, therefore notice in advance will be needed. Some Councils have different rules depending on the type of van or lorry being used.
The property buyer is responsible for insuring the property from the time contracts have been exchanged. You would need to have your insurance in place on the day of completion, so exchanging and completing on the same day can cause complications with this. If you are buying a property with a mortgage then the lender would usually require proof of the insurance.
When can you exchange and complete on the same day?
Simultaneous exchange and completions are suitable in some situations. These might include purchases or sales being carried out by buy to let landlords or companies. Sometimes these buyers may be able to proceed with cash only, so will not encounter the issues associated with a mortgage lender. They also would not need to move in (or out) on the day, meaning there would be no need for removals companies to be arranged and they would not be at risk of becoming temporarily homeless.