What is a contract of sale in conveyancing?

A contract of sale is the legally binding document that sets out the terms of a property transaction between a buyer and a seller.

What Does the Contract of Sale Include?

Each contract of sale typically covers the following key elements:

• Parties – The names and addresses of the buyer and seller
• Property details – A description of the property
• Tenure – Whether the property is leasehold or freehold
• Price – The agreed purchase price
• Deposit – Usually 10% of the purchase price, payable on exchange under the Standard Conditions of Sale, unless a lesser deposit is agreed
• Title guarantee (full or limited) – A guarantee from the seller that they are entitled to sell the property. A full title guarantee offers greater protection, while a limited title guarantee restricts the seller’s responsibility. A limited title guarantee may be provided where the seller is acting in their capacity as an executor or attorney
• Completion date – When the transaction is concluded, funds are transferred, and the keys are handed over
• Standard Conditions of Sale – Standard terms included in every residential contract which govern how the transaction is conducted
• Special conditions – Any additional agreed terms not included in the Standard Conditions. These may also include amendments to the Standard Conditions

What Is Exchange of Contracts?

Exchange of contracts is the point at which the transaction becomes legally binding.

During exchange, the buyer’s and seller’s solicitors will read out the contract over the telephone to each other to ensure that both parties hold identical and correct versions.

The solicitors will confirm the completion date, the deposit being paid, and the exact time exchange takes place. The original signed contract will then be sent to the other solicitor by post, unless an electronically signed contract is used.

Once contracts are exchanged, both parties are legally committed. If a buyer withdraws after exchange, they risk losing their deposit. If a seller withdraws, they may face legal action for breach of contract. Other remedies may also be available, such as specific performance or damages.

What Happens After Exchange of Contracts?

If You Are a Buyer

You should take the following steps:

• Inspect the property again before completion to ensure everything remains as agreed
• Ensure cleared funds required for completion are provided to your solicitor no later than the day before completion
• Arrange buildings insurance from exchange of contracts (this is the buyer’s responsibility in most transactions)
  • If purchasing a leasehold property, buildings insurance is often arranged by the freeholder
• Confirm arrangements with your removal company
• Notify relevant parties of your move (e.g. banks, GP, dentist, schools, employer, TV Licensing, DVLA)

Your solicitor will carry out final searches and lodge an interest at the Land Registry. They will also provide a financial statement confirming the balance due, which must be received at least one day prior to completion.

If You Are a Seller

You should take the following steps:

• Review the Fixtures and Fittings Form and ensure excluded items are removed
• Inform utility providers of your move and take meter readings on completion day
• Arrange mail redirection with the Post Office
• Notify relevant parties of your change of address
• Confirm arrangements with your removal company

Your solicitor will obtain a final redemption statement for your mortgage, request the estate agent’s commission account, and prepare a financial statement showing net sale proceeds due on completion.

What Happens on Completion Day?

On completion day, the seller must vacate the property and the buyer will receive the keys.

The buyer’s solicitors will transfer the remaining purchase funds to the seller’s solicitors. Once received, completion is confirmed and keys are released, usually via the estate agent.

For new-build properties, keys are often collected from the site office. For private sales, key arrangements must be agreed directly between the parties.

Payments on Completion

If you are selling, your solicitor will pay:

• Any existing mortgage
• Secured debts
• Estate agent’s commission
• Any service charge or ground rent arrears (for leasehold properties)
• Legal fees

The remaining balance will be transferred to your account, usually by the end of the day.

If you are buying, your solicitor will pay:

• Stamp Duty Land Tax to HM Revenue & Customs
• Apportionments of service charges and ground rent (if leasehold)
• Legal fees

Following completion, your solicitor will apply to register you as the new owner at the Land Registry. For leasehold properties, post-completion requirements may include serving Notices of Assignment and Charge, entering into a Deed of Covenant, and paying any landlord or managing agent fees.

What Is the Average Time Between Exchange and Completion?

Typically, 5–7 working days, which aligns with the minimum notice required to draw down mortgage funds. However, this period is negotiable between the buyer and seller.

What Is a Simultaneous Exchange of Contracts?

A simultaneous exchange occurs when exchange and completion take place on the same day.

Mortgage lenders usually require at least five working days’ notice to release funds, so simultaneous exchange is generally limited to cash purchases or chain-free transactions.

While possible, same-day exchange and completion can be stressful, as moving arrangements must be made without certainty until exchange has occurred.

Questions & Answers

“I am paying a 30% deposit — why have you requested only 10%?”
In conveyancing, the “deposit” refers specifically to the amount paid on exchange of contracts, not the total contribution towards the purchase. The Standard Conditions of Sale require a 10% deposit, though a lower amount may be agreed.

“I have no deposit — what happens?”
Deposit funds from a related sale may be used. If the available deposit is less than 10%, this must be disclosed to the seller’s solicitors. Exchange may proceed with a nil deposit if agreed.

“Why do you need my authority again on the day of exchange?”
Solicitors must obtain express authority on the day of exchange, as circumstances may change. Clear instructions are essential, as exchange creates a binding contract.

“Why has the sale completed if I haven’t received my funds yet?”
Completion occurs once the seller’s solicitors receive funds. Sale proceeds are typically transferred to the seller later that day.

“Can I leave excluded items for the buyer?”
No. Items listed as excluded in the Fixtures and Fittings Form must be removed. Leaving them would constitute a breach of contract.

“Can I give notice to my landlord before exchange?”
No. The completion date is not binding until exchange. Serving notice early could leave you without accommodation if the transaction is delayed.

How Pinney Talfourd Can Help

Whether buying or selling, the conveyancing process can feel daunting. Appointing an experienced solicitor ensures the transaction progresses smoothly and efficiently.

If you are buying or selling a residential property, our Residential Property team will be happy to assist. Please contact us on 01708 511 000 for further information.