Exchange of Contracts vs Completion: The Difference Explained

The clearest way to understand exchange of contracts vs completion is this: exchange is when the deal becomes binding and the moving date is fixed, and completion is when the money and the keys change hands. Everything before exchange is negotiable and everyone can walk away. Everything after it costs real money to undo.

Most of the anxiety in a Sussex move comes from not knowing which of those two moments you are waiting for. Estate agents talk about both as if they were the same event, and lenders use the word "completion" for their own internal steps. The two are separated by days or weeks, and they do completely different jobs.

What happens at exchange of contracts

Exchange is not a meeting. It is a phone call between the two solicitors, usually recorded, in which they read the contracts to each other, confirm they are identical, and agree the completion date. Once that call ends the contract exists and neither side can withdraw.

Before your solicitor will make that call, several things must already be true:

• Searches are back and enquiries are answered to your solicitor's satisfaction.
• You have a formal mortgage offer, not an agreement in principle, and your solicitor has the lender's instructions.
• You have signed the contract and the transfer deed, and read the report on title.
• Your deposit, normally ten per cent of the purchase price, is sitting with your solicitor as cleared funds.
• Everyone in the chain has reached the same point and agreed the same completion date.

That last condition is why exchange so often slips. In a chain of five, exchange happens when the fifth party is ready, not when you are. The contracts are exchanged along the chain in sequence, which is why the call can come late in the afternoon after a day of waiting.

What happens at completion

Completion day is a series of bank transfers. Your solicitor draws down the mortgage advance from your lender, usually the working day before or on the morning itself, adds your balance, and sends the full purchase money to the seller's solicitor. That firm uses it to redeem the seller's own mortgage and to fund their client's onward purchase, and so on up the chain.

When the seller's solicitor confirms the money has arrived, they authorise the estate agent to release the keys. Under the Standard Conditions of Sale, which most residential contracts use, money received after 2pm counts as received the following working day, so a mid-afternoon transfer can technically push completion into tomorrow. In practice solicitors work hard to beat that deadline, which is why keys are usually available early afternoon.

Afterwards your solicitor deals with stamp duty land tax and registers you at HM Land Registry. Those steps take weeks and do not hold up your move. Our guide to completion day covers the hour-by-hour version, and stamp duty when moving home explains what is payable.

The gap in the middle

Between exchange and completion the property is legally sold but not yet yours. One to two weeks is the standard gap, and two weeks is the most common in a chain. That window exists so that everybody can act on a date that is finally certain.

Use it for the things that were too risky to confirm earlier:

• Book and pay for removals. Hold a provisional slot before exchange, confirm it within the hour afterwards. Fridays and month ends go first across Sussex.
• Give notice on a rental, if the notice period fits.
• Arrange buildings insurance. Under the Standard Conditions of Sale the seller keeps the risk in the property until completion, but almost every mortgage lender requires the buyer's buildings cover to be in place from exchange. Follow your lender's requirement.
• Book meter readings, redirect post and notify suppliers. See who to notify when moving and setting up utilities.

What you cannot do is start work, move belongings in, or take measurements without the seller's permission. They still own it.

What it costs to break the contract

This is the real difference between the two dates. Before exchange, either side can walk away and lose only their wasted fees. After exchange, the contract is enforceable.

If the buyer fails to complete on the agreed day, the seller can serve a notice to complete. Under the Standard Conditions of Sale that makes time of the essence and gives the defaulting party ten working days. Interest at the contract rate, defined in those conditions as the Law Society's interest rate, runs on the outstanding balance for every day of delay. If the buyer still does not complete, the seller can end the contract, keep the ten per cent deposit and pursue further losses if the property later sells for less.

The same notice works the other way. A seller who fails to complete has to return the deposit with interest and can be sued for the buyer's wasted costs, including removals, storage and temporary accommodation.

Those consequences are why solicitors will not exchange until the file is genuinely ready, and why pressure from an agent to "just exchange" is worth resisting.

Simultaneous exchange and completion

Exchanging and completing on the same day is possible and occasionally sensible: a chain-free cash purchase where both parties want it done, or a situation where a deadline is about to be missed. It removes the safety margin entirely. If a CHAPS payment is delayed by a bank's fraud checks, there is no spare day, the removal van is loaded, and the keys are not released.

Most Sussex conveyancers will do it if asked and will advise against it first. If you are going down that route, complete early in the week and never on a Friday.

A quick reference

• Exchange: contract becomes binding, completion date fixed, ten per cent deposit paid, removals can be confirmed. You still cannot enter the property.
• Completion: balance transferred, ownership passes, keys released, stamp duty and registration follow.

For the timeline that leads up to both, read how long conveyancing takes in Sussex and the full conveyancing process explained, or start planning from the Move Sussex homepage. The government's own buying and selling your home guidance covers the legal steps in outline, and the Law Society explains what your conveyancer is doing at each stage.

Frequently Asked Questions

What is the difference between exchange of contracts and completion?

Exchange is the moment the sale becomes legally binding and the completion date is fixed. Completion is the day the balance of the money moves, ownership transfers and you get the keys. Between the two, nobody can pull out without serious financial consequences, but the property is not yours yet and you cannot move in.

How long between exchange and completion?

One to two weeks is the norm, and two weeks is the most common gap in a chain. It gives everyone time to book removals, arrange final mortgage drawdown and give notice on a rental. Simultaneous exchange and completion on the same day happens on chain-free purchases but leaves no margin if a bank transfer is delayed, so most solicitors advise against it.

Can you pull out after exchange of contracts?

Not without paying for it. A buyer who fails to complete normally forfeits the deposit, usually ten per cent of the price, and can be sued for the seller's further losses if the property later sells for less. A seller who fails to complete has to return the deposit with interest and can be sued for the buyer's wasted costs and losses. Exchange is the point of no return, which is why it happens only when everyone is genuinely ready.

What is a notice to complete?

If one side does not complete on the agreed day, the other can serve a notice to complete. Under the Standard Conditions of Sale that makes completion of the essence and gives the defaulting party ten working days to finish. Miss that and the contract can be brought to an end, with the deposit forfeited or returned depending on who defaulted. Interest at the contract rate runs on the balance for every day of delay.

Do you pay the deposit at exchange or completion?

At exchange. The deposit, normally ten per cent of the purchase price, has to be with your solicitor as cleared funds before they can exchange on your behalf. The rest of the money, mortgage advance included, moves on completion day. Reduced deposits of five per cent are sometimes negotiated, but the seller can still claim the full ten per cent if you then fail to complete.

When should I book removals, before or after exchange?

Get quotes and hold a provisional date before exchange, but only confirm and pay a deposit once contracts are exchanged and the date is legally fixed. Before exchange the date can move by weeks. Good Sussex firms book up for Fridays and month ends, so tell them your likely window early and confirm within an hour of exchange.