What can go wrong between exchange and completion?

If you have had any experience in the process of buying or selling a home, you'll be aware that it can be quite a tense, stressful time. 

Not only because of the sheer amount of effort and energy you need to expend to line everything up, but also because of the things that are beyond your control, which might have an impact on you successfully completing on your new home.

Even if you've managed to agree on a price to sell your current house, lined up the removals firm with a tentative date, organised the mortgage and buildings insurance, sorted out the utilities in the home you're leaving and the property you want to buy, there is still so much that can go wrong.

In truth, once you've got to the point of letting the ink dry on contract signatures and the solicitors have swapped them, there are still some pitfalls which might set back your plans before you can get to the point of completion and picking up those all-important keys.

From a legal standpoint, once your seller has signed their copy of the contracts and your respective solicitors have confirmed receipt of the paperwork, they are legally obliged to see the sale through to completion. Should they pull out for any reason, you do have the recourse of taking action against them, the result of which may be severe legal and financial penalties.

But what can go wrong and what else should you be aware of?

Quick Move Now releases helpful data about fallthrough rates. For example 31.3% of completion fell through in Q1 2024, followed by 20% for Q2. Although the majority of these occurred earlier in the process - perhaps there was something undesirable found in the survey, or simply there was a change of mind because negotiations on the asking price didn't fall their way - it does occasionally happen during the period leading up to completion day. This makes it a very stressful time.

Naturally, you hope that everything will run smoothly, but you should be prepared for the possibility of things going awry in the period between exchanging contracts with your seller (and/or your buyer) and completion.

Once the contracts have been exchanged, the solicitors involved in the process will complete a few final checks to verify that nothing has changed between the time they performed the initial searches and confirming successful exchange.

At the same time, your mortgage lender (and all those involved with your buyer and seller) will be gearing up to transfer the funds, and you will be making preparations to pack up your current home and arrange for it to be removed to your new home.

Conceivably, you could arrange for the exchange of contracts and completion to occur on the same day, although this course of action would be unwise, because it creates the increased likelihood of things to go wrong, while also being immensely stressful.

There is no legal imperative setting the time between the two milestones (except for purchases of new-builds, which must be completed within 28 days of contract exchange), but, on average, it is around the four-week mark. This allows for everything to be prepared and lined up for the big day.

Nevertheless, there are potentially trips and stumbles that can have a serious impact on its success:

Financial problems

Mortgage problems - although it's unlikely, your buyer's lender may decide to withdraw their offer to provide a loan. Worse, your own lender may come up with issues that cause them to withdraw their financial support of a loan to you.

If it is down to your mortgage lender, liaise with them from the outset and keep in constant contact to avoid any surprises. If you are at all concerned at any point, you should contact them to confirm that you are still in position to receive their loan, as you are continuing to meet their criteria. 

If your buyer must pull out because they have lost their mortgage offer after exchange, be aware that they will lose their deposit (usually set at 10% of the sale price), which is a financial incentive for them to resolve the problem quickly.

Redundancy - it happens unfortunately, and particularly when the economic situation is uncertain. If your buyer is made redundant, the likelihood is that their mortgage lender will retract their offer since they no longer meet the original criteria for the provision of the loan.

If your seller is made redundant, it is quite likely that they will want a swift sale to you to gain access to the funds. If you can accommodate an earlier date for completion, then you should consider it as it will also help to avoid relational problems with your seller.

Bankruptcy - if, for any reason, your buyer is made bankrupt, it means that they will have to withdraw from the purchase because they will not necessarily have access to the requisite funds to continue.

Worse, if it's your seller who is in bankruptcy, your planned purchase may be immediately blocked. When someone is made bankrupt, their assets will be seized, and this could include the home. In this case, it is their current mortgage lender who will take ownership of the property to sell on and recoup as much of the money owed to them. Since you are no longer in a contract with the original seller, the transaction ceases to be legally viable.

As an aside, if you have your heart set on still buying the property, you might be able to purchase it at the auction at which the mortgage company plans to sell it. But, either way, remember that you'll be starting the process almost anew.

Death - if, unfortunately, one of the participants dies in between the contract milestones, it creates further problems. They are obviously no longer able to transfer the ownership of a property either as a buyer or seller. 

If they were selling, their estate will be subject to the delays created by probate before their effects can be released for any eventual sale.

Payment delays - it's completion day and you're waiting for the chain to do its stuff with transferring funds. It's a ripple effect along the chain and the longer that chain is, the more likely it is for delays in payment transfer to creep in, especially if you are towards the end of it. 

Ultimately, you won't be able to take possession of the keys to the property until you have confirmation that the relevant money transfers have concluded successfully.

Process problems

Property chain - “a chain is only as strong as its weakest link” so the saying goes and that's true of a property chain.

The longer the chain, the more complex the financial dealings, which will have this ripple effect running along its length. One way to avoid such complications, if you can afford the time, money and energy to do so, is to forcibly break the chain as part of your plan - put your belongings into temporary storage and rent a place, perhaps, or take out a bridging loan to buy your new property.

Such plans are not without their risks, but it is something to consider since it takes away some of the high stress that would be otherwise there on completion day.

Documentation errors - it shouldn't happen, of course, but there may be some problems identified at this late stage in the legal documentation. Your solicitor will be doing some final checks at the stage as you stampede towards completion, and this might unearth some errors or questions.

You might also be reading through some of the forms or even the survey and, in so doing, find a couple of things that you don't quite understand. If your solicitor can't verify the position or clarify the terminology used to your understanding, the question needs to be raised with your seller's solicitor, which will take time.

While there is an impetus to getting the answers as quickly as possible to avoid any potential delays, this really depends on the severity of the issues raised.

You should ensure at the outset that your solicitor has a reputation for focused, quality legal work, and that their case management system provides clear and timely documentation and responses to any questions you raise throughout the process of selling your home.

Legal queries - although it shouldn't happen that frequently, it can occur that a point of legal query is raised during this period. 

In the final checks that your solicitor will make to verify that completion is sound, this might unearth problems that need to be resolved and perhaps lead to delay.

Communication problems

Disputes - if your buyer or seller has been obtuse throughout the whole process, it's reasonable to assume that they'll continue to be difficult once you've exchanged contracts.

Even if the relationship has been amicable and positive thus far, there may be any reason for them to raise a dispute with you. Correspondingly, you might have a dispute to raise with your buyer or seller that they can't agree on.

All such problems will potentially add delay to the process that, if not resolved, may even put the entire transaction in jeopardy.

Communication breakdown - allied with disputes and behaviour associated with that, you might find that they become uncommunicative or deliberately recalcitrant in their responses that will then risk adding delay to the process.

Other problems

Removals - although you might have set a date in your diary for a projected date, you can't be certain that the planned completion date when you will get the keys will be met exactly. However, you can mitigate this problem by keeping the removals firm in the loop of communication, so that they can highlight any issues before they become a significant problem.

And you should be aware of the length of your chain and where you fit into it. Because of the machinations of the financial process, where funds are transferred all the way along the line, it might be the case where the transaction simply won't happen until the next business day. Another reason, other than the increased cost due to demand, for avoiding Fridays for a move date!

Fire, storm or flood damage - you have no control over this, of course, but you may find that the home you are planning to buy has been impacted by a fire or the ravages of storms and floods as you enter the period between the contracts being exchanged and finally completing the transfer of ownership.

Effectively, you are in control of the building from the point of the exchange of contracts when it comes to problems caused by weather, flooding or fire. It therefore makes sense to verify with your insurer what your buildings insurance will cover. Note that your solicitor's initial searches may have already unearthed a propensity to flood in the area and this may have already been factored into the policy you have raised with the insurer.

No doubt, you're reading this litany of problems with goggled eyes, wondering where you can go with all this information.

But don't worry, there are some things you can do to mitigate or eradicate the issues before or as the arise:

Your solicitor - it's imperative that you appoint a solicitor who knows the area in which you are buying or selling, who is focused on your transaction, and provides a quality service at a value-for-money fee that is protected by the “no completion, no fee” guarantee. Talk to Homeward Legal to find out more!

Forms - Complete any form as soon as you receive it, and make sure your answers are complete, concise and clear. If there are any questions about the details you are required to provide, ask your solicitor for help and guidance. That's one of the things they are there for - to help you through a smooth transaction.

When you receive completed forms from your seller, read them immediately and highlight any questions, however apparently trivial, to your solicitor. 

Communication - keep your communication timely and to the point. Keep your mortgage lender, removals firm, and any others up to date on the key information they require so that decisions that need to be made can be taken early.

Plan - plan for the day itself, so that you are prepared and ready. Consider breaking the chain by moving out earlier than completion or setting the completion date for your purchase later than the complete date for your sale. Think about putting your belongings in temporary storage, if you can afford it, to move out of the home earlier to break the chain.

For the moving in day, pack a box of the things you'll need immediately upon arrival in your new home (kettle, mugs, tea, coffee, sugar, biscuits, spoon, etc.) and pack a bag that contains all your important documents (such as passports, credit cards, wallets and purses, driving licences, etc.). And make sure they travel with you.

So, if you're planning on buying a home, you need to protect yourself as much as you can, which is why you should appoint a solicitor with Homeward Legal, because we guarantee that if your transaction falls apart for any reason, you won't have to pay any of the solicitor's fees.

The experts at Homeward Legal are well-versed in all aspects of the conveyancing process, providing a quality service at a fee that is great value for money!

Call to discuss your concerns with your plans to purchase or sell your home or get a quick quote online.