If you are asking this question “What Can Go Wrong Between Exchange And Completion?” you have either just exchanged contracts or you are approaching completion date and are feeling anxious about what could go wrong before you complete.
Let’s start with the good news, which is that in 99% of cases, absolutely nothing goes wrong between exchange and completion.
What usually happens is that the solicitors exchange contracts happens as planned; the buyer’s solicitor receives the money from the mortgage company ready for completion date, the removal companies are primed and ready to go on the day of completion, the day comes and all goes ahead as planned.
The buyer receives the keys to the property from the estate agent on completion day and moves in as expected.
So in 99% of property transactions, that is precisely what happens.
But what about the other 1% of property purchases?
What goes wrong between exchange and completion in those circumstances.
1. The Buyer Or Seller Changes Their Mind
If the seller changes their mind, they will be liable to the buyer for all legal costs and expenses incurred until they pull out of the purchase, but that is largely it. The buyer loses the property that they were excited to move into or let out and has to start their search all over again.
However, if the buyer changes their mind, it can prove very expensive. As well as paying all of the seller’s legal costs and expenses, they will also be responsible for the interest on the money that the buyer would have received.
In addition to this, they could claim compensation for any further losses, for example, if the property doesn’t sell for many months then sells for less due to a drop in the property market.
This can run into thousands, but the question still remains about whether the purchaser would have the means to pay the seller, so the money due might not materialise for the seller.
2. The Buyer Loses Their Job
If they buyer loses their job between exchange and completion, and they have a mortgage which has been approved on the basis of the buyer having that job, the mortgage company may rescind their offer of a mortgage.
This would mean that the buyer would simply not have the money to complete the purchase on completion day.
Again, whilst their will be financial losses and interest due to the seller, if the buyer has lost their job, it is unlikely that they will be able to pay them.
3. Death Of Either Party
If either the buyer or the seller dies, this can terminate the contract as there is no one to complete it.
In the case of the buyer, again the seller will be entitled to costs and expenses, but whether they seek to reclaim these from the estate of the deceased is another thing.
In the case of the seller, the executors of the estate will have to decide what is in the best interests of the estate; either go ahead and complete the sale, or pull out and incur the costs and expenses associated with that decision.
If the plan is to sell the house in any event, they are likely to proceed, but, subject to one important requirement.
They will need to obtain Grant Of Probate before they can complete the sale.
Whilst you might think this should not be a problem, obtaining grant of probate can take anything from three to seven months, depending how busy the probate office is at the time.
Clearly, with the average time for completion being two weeks, grant of probate will not be obtained in time, meaning that the sale cannot complete on the planned date and the estate will incur interest and cost penalties.
The only opportunity here is for the executors to explain the position to the buyers and hope that they will be understanding to the situation.
If either the seller or buyer is declared bankrupt between exchange and completion of the sale, they will then have no legal capacity to complete the deal. Completion will simply not be able to happen as their must be at least two parties with ‘capacity’ to complete a contract.
The bankruptcy would remove that capacity.
5. A Problem About The Property Comes To Light
If a problem is discovered about the property which the seller did not reveal when they should have done, this may allow the buyer to pull out of the purchase.
However, if they are in a chain with someone buying their property, they will be liable for any costs and expenses of their purchaser if they pull out of the purchase.
If the problem can be satisfied with compensation for the purchaser to rectify the issue, this might be the easiest and best option.
6. The Property Is Damaged By A Storm, Fire Or Flood
If the property is damaged between exchange and completion by a storm, fire or a flood, what happens to that property will depend on the terms of the contract and who is responsible for the property in terms of insurance and repairs.
In any event, the buyer is still likely to have to complete the purchase as they are likely to be moving out of their property so that their buyer can move in.
In these circumstances, the buyer is likely to have to move into short term accommodation such as a hotel before arranging a longer term rental whilst the repairs are carried out to the property once the insurance company of the buyer or seller (whoever was responsible) has approved the repairs.
What Do You Do If Something Goes Wrong Between Exchange And Completion
If something has happened to stop your completion, the first thing to do is to seek your solicitor’s advice.
If your completion did not proceed due to potential professional negligence by your solicitor, you should speak with one of our specialist professional negligence solicitors.