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When you’re buying a house what does ‘completion’ mean?

When you are buying or selling a house or flat the final steps will be the exchange of contracts and, ultimately, completion.  Sometimes – particularly if this is the first property transaction you’ve been involved in – you may not be familiar with these terms so in this blog I will answer the question ‘what does completion mean?’.

The first point to remember is no sale or purchase is legally binding until the contracts are exchanged which means either party can pull out without penalty.  This is why the solicitors on both sides will encourage you to exchange as quickly as possible once your mortgage is in place and the majority of the legal work has been done.

The actual exchange is all taken care of in a telephone conversation between your lawyers and the lawyers acting for your buyer or vendor.  They will confirm the terms of the contract and the size of the deposit the buyer will put down.  Once this has been agreed the exchange of contracts has taken place and the buyer and the seller are legally committed to the transaction.

If for any reason the transaction doesn’t go ahead once the exchange has been made, the buyer will lose their deposit.  Or, if it is the seller who pulls out, they would face legal action and would more than likely be forced to pay the buyer damages.

This is all fairly straightforward if there are only two parties involved but it can become a little more protracted if you are in a chain. If you are in a chain, the exchange of contracts can’t happen until everyone involved is ready to proceed.

Once the exchange has been made your lawyer will make one final check that your circumstances haven’t changed during the sale or purchase process and that you are definitely able to meet your mortgage payments.  Then your completion date will be set.

Your lawyer will agree the date for completion with the other party and their solicitor.  On completion day your lender will release the money once they receive a Certificate of Title (the ownership history of your property) from your lawyer.  They will then transfer those funds to the other party’s solicitor.

And you will be able to pick up the keys to your new home.

Once the final checks are done, and the money is transferred to your solicitor, they will then pass on the funds to your vendor’s solicitor. When the vendor receives the money, your purchase is complete and you can pick up the keys to your new home.

Very soon after completion your lender will send you a letter confirming how much your first mortgage payment will be and when it needs to be paid by.  Your first payment is likely to be higher than your usual monthly payment. This needn’t cause concern.  It is only because it will include the interest for any additional days between the date you moved in and the end of that calendar month as well as your standard payment for the next month.

If you are about to buy or sell a house and have any legal questions or would like to talk through the process, please email me at Jeremy.Tulloch@collinshoy.com or call me on 0208 515 6600.   

Photo by Brett Jordan on Unsplash