Selling a Property

Exchange of Contracts, What Happens on the Day and What Can Go Wrong

Exchange of contracts is the moment a property sale becomes legally binding. This guide explains exactly what happens on exchange day, what solicitors check beforehand, and why some transactions fail at the last hurdle.

Published: 16 Mar 2026 · Updated: 16 Mar 2026 · 9 min read

#HouseSelling#PropertyMarket#ExchangeOfContracts#UKConveyancing#PropertyPassportUK

What is Exchange of Contracts?

Exchange of contracts is the legal event that makes a property sale binding on both parties. Until this moment, neither the buyer nor the seller is legally obligated to complete the transaction. After exchange, both parties are contractually committed: the buyer must buy and the seller must sell, on the agreed terms, on the agreed completion date.

If either party pulls out after exchange, they face significant financial and legal consequences. For the buyer, this typically means losing their deposit. For the seller, they may face a claim for damages.

What Happens Legally on Exchange Day?

Exchange of contracts is conducted by the solicitors on each side, almost always over the telephone using a standardised procedure known as the **Law Society Formula**. The most commonly used version is **Formula B**.

The process works as follows:

1. Both solicitors agree that their clients are ready and all pre-exchange checks are complete.

2. The buyer's solicitor reads out their signed contract over the telephone.

3. The seller's solicitor reads out their signed contract.

4. Both solicitors agree that exchange has taken place and note the time.

5. The solicitors date their respective contracts with the agreed exchange time.

6. The buyer's solicitor sends the signed contract and the exchange deposit (usually 10% of the purchase price) to the seller's solicitor.

From this point, a legally binding contract exists.

What is Checked Before Exchange?

The weeks of conveyancing work between offer and exchange are designed to ensure both parties are ready and willing to exchange on safe terms. Before exchange, your solicitor will confirm all of the following:

Check	Who verifies it	Why it matters
Title is clean	Buyer's solicitor	Confirms seller has good title to sell
Searches are satisfactory	Buyer's solicitor	Local authority, water, environmental, drainage
Mortgage offer is valid	Buyer's solicitor	Lender's offer must be in place and not expired
Property information form reviewed	Buyer's solicitor	TA6 and TA10 fixtures form reviewed and queries resolved
Survey reviewed	Buyer (usually)	Any defects must have been negotiated or accepted
Building insurance arranged	Buyer	Buyer is responsible for the property from exchange
Deposit funds cleared	Buyer's solicitor	Deposit must be in solicitor's client account and cleared
Completion date agreed	Both solicitors	Must be acceptable to all parties in the chain
Contract signed by client	Both parties	Each client must have returned a signed contract

The Exchange Deposit

The exchange deposit, typically 10% of the purchase price, is paid by the buyer's solicitor to the seller's solicitor at the moment of exchange. This deposit is held by the seller's solicitor until completion.

If the buyer pulls out after exchange, the seller keeps the deposit. If the seller refuses to complete, they must return the deposit and may face a claim for damages.

In some cases, particularly in longer chains, the deposit may be reduced by negotiation (for example, to 5%) if the buyer does not have 10% immediately available. Both parties must agree to this in writing.

What Can Go Wrong at the Last Minute?

Despite weeks of preparation, exchanges do fail at the last moment. Common reasons include:

**Mortgage offer expired or withdrawn.** Mortgage offers typically last three to six months. In a slow conveyancing process, they can expire before exchange. If the buyer's circumstances have changed, a new job, a change in income, or a new credit commitment, the lender may refuse to renew.

**Deposit not in the solicitor's client account.** The buyer's deposit must be cleared funds in the solicitor's account before exchange can proceed. Transfer delays, compliance checks, or last-minute problems with the source of funds can delay or prevent this.

**A party in the chain not ready.** Even if you and your buyer are ready, if another link in the chain has not resolved a query or received their mortgage offer, the entire chain must wait.

**Undisclosed defect discovered late.** A surveyor's report submitted to the lender (as opposed to the buyer) sometimes throws up issues that the buyer's survey missed. The lender may require works before releasing funds.

**Last-minute renegotiation (gazundering).** A buyer aware of the seller's desire to exchange on a particular date may attempt a last-minute reduction in price.

**Solicitor error.** In rare cases, a solicitor may discover a legal issue, an outstanding charge that has not been redeemed, a discrepancy in the title plan, or a missing consent, that must be resolved before exchange can proceed.

**Client changes their mind.** Either party can simply decide not to proceed. Whilst the other party can potentially claim wasted costs up to that point, they cannot compel exchange.

Same-Day Exchange and Completion

In some transactions, typically cash purchases with no chain, exchange and completion happen on the same day. This is common in auction sales (where exchange occurs on the fall of the hammer) and in certain other circumstances. Same-day exchange and completion removes the risk of either party pulling out between exchange and completion, but requires everything to be in order before the day itself.

Using Property Passport UK to Prepare for Exchange

Property Passport UK allows sellers to pre-load their property's documents, title information, EPC certificate, planning history, and property information form responses, into a structured data room. This means your solicitor receives the information they need at the outset of conveyancing, reducing the time to exchange and minimising the window for last-minute problems to arise.