Exchange of contracts is the moment a UK property sale transforms from an informal agreement into a legally binding commitment. Up to this point — through the months of searches, surveys, and solicitor correspondence — either side can walk away. After exchange, walking away means losing the deposit (usually 10% of the purchase price) and potentially being sued for further damages.
What actually happens at exchange
Despite the name, there’s no literal physical exchange. Both solicitors hold identical signed contracts. They speak by phone (increasingly by secure email), confirm they are “ready to exchange”, and — the moment they agree — the contracts are deemed exchanged.
At that instant:
- The sale is legally binding on both buyer and seller.
- The completion date is fixed (typically 1–28 days later, but anything can be negotiated).
- The deposit is paid — usually 10% of the purchase price, transferred from buyer’s solicitor to seller’s solicitor.
- The buyer takes on the risk of damage to the property between exchange and completion (hence the need for buildings insurance from exchange day).
What needs to be in place before exchange
All of the following are usually completed first:
- Conveyancing searches (local authority, water, environmental, mining if applicable)
- Property Information Form (TA6) and Fixtures and Fittings form (TA10) returned by the seller
- Leasehold management pack (LPE1) if the property is leasehold
- Survey completed and any issues resolved or priced in
- Mortgage offer issued (if the buyer is mortgaging)
- Title checks completed
- Any enquiries raised by the buyer’s solicitor answered
It’s the accumulation of these items — and how long each takes — that drives the typical 10–14 week gap between offer acceptance and exchange on an open-market sale.
Exchange in a cash sale
A direct sale to a principal cash buyer can compress this dramatically. With no mortgage to wait for, no mandatory survey, and often minimal paperwork requirements, exchange can happen within 24 hours of offer acceptance in straightforward cases. For leasehold sales, the LPE1 is sometimes the remaining dependency — though a cash buyer may be willing to proceed without one where the freeholder is uncooperative.
What happens if someone tries to pull out after exchange?
The party trying to withdraw typically loses their deposit and can be sued for the seller’s additional losses (remarketing costs, carrying costs, price difference if resold for less). Buyers very rarely pull out after exchange because the financial penalty is severe. Sellers, too: a seller who fails to complete after exchange can be forced by court order to do so.
In other words: exchange is the single most important milestone in a UK property sale. Everything before it is subject to change. Everything after it is committed.
Related
- Sold STC — the pre-exchange stage where 25% of sales collapse.
- Completion day — what happens after exchange.
- Conveyancing — the legal process leading to exchange.