In purchasing a property, the first step is to offer to buy a property at an agreed price. If the seller accepts this offer, then it is ‘sale agreed’. At this point the seller will take the property off the market. But there is still a way to go yet before the property is legally purchased. Slightly different rules apply at an auction. Once a bid is accepted, the property is fully legally sold to the successful bidder and that is the case whether he signs the contracts or not.
Once the “sale agreed” stage is arrived at, a deposit on the sale is made to the auctioneer selling the property. The deposit can be agreed, or it can be up to 5%. This deposit payment does not legally bring about a sale as there are still a lot of matters to be resolved prior to the exchange of contracts. Such matters as a structural survey may turn up issues that will cause the purchaser to have second thoughts on proceeding. Or perhaps the purchaser may not succeed in acquiring the full amount of loan he was seeking. In such cases, the deposit is refundable as the sale is not proceeded with. However, subject to everything being in order, then it is time for your solicitor to arrange the signing and exchange of contracts.
Exchange of Contracts
From a legal point of view, the exchange of contracts now brings about a fully binding agreement. Before that happens your solicitor will then examine in detail the title to the property to ensure the title is in order and will then proceed to draft the deed of purchase. On the “closing date” the balance of the purchase price will be paid and “closing of the sale” takes place. The seller signs the transfer documents and when the balance of the purchase price is paid over, the property legally passes from the seller to the new owner. So “Sale agreed” does not mean the same as “Sold” !!