Glossary · UK

What is Exchange of Contracts?

The point in a UK property purchase when buyer and seller sign and swap contracts, making the sale legally binding and committing both parties to completion.

Full Definition

Exchange of contracts is the moment in an English, Welsh or Northern Irish property transaction when the buyer's and seller's signed contracts are formally swapped, usually by their solicitors, and the deal becomes legally binding. Until exchange either side can walk away without penalty; afterwards both are committed to completing on the agreed date, and the buyer typically pays a deposit (commonly around 10%). The buyer becomes responsible for insuring the property from exchange. Backing out after exchange can mean losing the deposit and facing further claims. Exchange is when key obligations crystallise, including the buyer's duty to fund the purchase and pay Stamp Duty Land Tax on completion (Land Transaction Tax in Wales, Land and Buildings Transaction Tax in Scotland, where the process differs). It matters because mortgage funds, surveys and searches must all be in place before exchange -- it is the practical point of no return in buying a home.