What Are Draft Contracts When Buying A House?

What Are Draft Contracts When Buying A House?

What Are Draft Contracts When Buying A House?

A draft contract in the context of buying a house is a preliminary document that outlines the basic terms of the prospective sale. It is prepared by the seller’s solicitor and includes information such as the price, deposit, and any relevant details from the title deeds.

The draft contract is not legally binding until the exchange of contracts, which happens during the final stages of the process

The draft contract is subject to negotiation between the buyer’s and seller’s solicitors. Once the final terms have been agreed upon and any issues have been resolved, the transaction becomes legally binding. At this point, neither party can withdraw without potentially facing legal action and significant costs.

The draft contract is different from the final contract because there are many more hurdles which could shape the eventual agreement. For example, the buyer might want to know if any of their neighbors have applied for planning permission to build large extensions that could block out sunlight, or if there is a plan to build a railway tunnel below the property

The draft contract also includes contingencies, which are conditions that must be met before the property is sold. These can include financing, home inspections, closing costs, and the closing date

In an ideal world, it should take around 4-8 weeks from the draft contract stage until the day you exchange. However, a lot can happen before completion day, and the process is not always that simple

Draft contracts are a key step in the process of buying a property. They are prepared by the seller’s solicitor and contain the basic terms of the sale, including:

• The parties involved (buyer and seller)
• The address of the property
• The agreed purchase price
• The proposed completion date
• Any special conditions

The contracts go through a negotiation process between the buyer’s and seller’s solicitors before being finalized and exchanged. At the draft contract stage, the buyer’s solicitor will review the contracts and raise any necessary enquiries with the seller’s solicitor.

Once the draft contract has been negotiated and finalized, the parties are ready to legally exchange contracts. This is when the transaction becomes legally binding. The buyer will also pay a deposit at exchange.

After exchange, the legal ownership of the property remains with the seller until completion. Completion typically takes place 1-2 weeks after exchange. At completion, the remaining purchase monies are paid, the keys are handed over and the property legally transfers to the buyer.

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How Long From Draft Contract To Exchange

It typically, it takes 4-8 weeks from receiving the draft contract to reaching exchange of contracts when buying a property.

While 4-8 weeks is a general guideline for the time from draft contract to legally binding exchange, it’s wise to anticipate it may take longer for more complex transactions or if any issues arise. Flexibility is key when estimating the conveyancing timeframes.

However, this is just an average timescale and the actual time taken can vary significantly depending on the particular transaction. Here are some more details:

• Simple, chain-free transactions with no issues may progress from draft contract to exchange in as little as 2-4 weeks.
• Conversely, more complex purchases involving chains and multiple parties can take 10-12 weeks or longer to get from draft to exchange.
• The time spent on enquiries is a major factor – 1-4 weeks is common for enquiries, but more can lead to delays.
• Any issues uncovered in the draft contract or during enquiries need resolving before exchange can happen. This can hold things up.
• Delays by any party in the chain will postpone exchange for all linked buyers/sellers.
• Mortgage offer timings, responses to searches and availability of all parties impact time to exchange.
• Most estimate 4-6 weeks from draft contract to exchange is typical, but allow longer for complex or problematic purchases.

What Happens After Draft Contracts Received?

The buyer’s solicitor reviews the drafts, raises enquiries and negotiates any necessary changes before exchange.

The buyer’s solicitor has several key tasks to complete after receiving the draft contracts, including raising enquiries, negotiating changes, resolving issues and advising their client before legally binding exchange can occur.

Here’s an overview of what typically happens after the draft contracts are received in a property purchase:

• The buyer’s solicitor will thoroughly review the draft contract pack and supporting documents to understand the terms of the transaction.
• They will raise enquiries (questions) to the seller’s solicitors to clarify any uncertainties and obtain additional information about the property.
• The buyer’s solicitor may suggest amendments to the draft contract to protect the buyer’s interests or reflect agreed positions.
• Negotiation between the solicitors over contractual terms may be needed to finalise the draft contract ready for exchange.
• The buyer’s solicitor will also review results from searches and the mortgage lender’s requirements at this stage.
• Any issues arising from the above will need resolution before exchange of contracts can take place. Further enquiries may be required.
• Once satisfied with all aspects, the buyer’s solicitor will report to their client and confirm their readiness to formally exchange contracts and set a completion date.
• The buyers and sellers will both need to agree and sign the final contract before the solicitors can arrange exchange.