The legal agents involved with the exchange of contracts will generally read out the stipulations involved to each other telephonically, before mailing them out to each other. This process is known as the ‘exchange’.
In the case of you being a member of a chain of exchange of contracts
, your legal representative will do the exact same thing. In this case, however, they will only reveal such contracts to the lawyer who is representing the other group on the basis that all other chain members are satisfied with such a procession.
While this process can easily be a smooth and agreeable process
, it can be completely hindered by a single member’s obstinance. For this reason, it is important that everyone is always on the same level of understanding.
Once such exchanges have been processed, you are now legally bound
by such a contract to sell or buy the property or properties involved. A failure to meet such requirements will result in you forfeiting your deposit, as well as coming under legal fire is those spurned wish to sue you for your breaking of contract.The Reasons as to why People Exchange Contracts
The main reason why people exchange contracts is largely due to the legal obligation to sell or buy the relevant properties such a legal binding enforces. Until such contracts have been exchanged, neither side has any obligation to buy or sell anything.
If such a legal process has not been completed, you are welcome to walk out of any dealings without any penalties. As one can imagine, such an exit can result in a catastrophic financial tumult as those involved suddenly have all of their investments up in the air.
That being said, once the contract has been carried out, a failure to step up to the completion of its stipulations can begin accruing hefty penalties every day that the side at fault does not fulfil their end of the bargain. Such penalties will build as interest.
What is known as the injured party (the group that is having hassles presented to them as a result of the buyer or seller failing to enable the terms on time) will then set a time limit - which is generally 10 days - for the offending party to carry out the transaction in what is known as a Notice to Complete.
A failure to meet the terms of the Notice to Complete will then lead to the cancellation of any contracts by the injured party, and the deposits that the offending party pledged will be lost. As one can imagine, such a process is very rare, and very few people would ever suddenly begin pulling out of such a steep binding once the terms have been agreed upon.
It is of the utmost importance that you ensure that you follow the terms stipulated in such contracts very carefully, in order to avoid financial and legal trouble, and ensure that you get the most out of such dealings.