What happens on completion day
For months you’ve been going back and forth with your solicitor and estate agent, trying to finalise the process for the purchase or sale of a home. It’s a long-winded process that can seem to drag on, but it all culminates on a day known as ‘Completion day’.
Completion day is the final step when purchasing or selling a home. It’s the last day on which the seller has ownership of the property before they have to move out, and it is transferred over to the buyer.
In an ideal world, completion day goes as smoothly as possible with no hiccups. However, that isn’t always the case. Problems can arise, which can throw a spanner in the works and delay the purchase or sale of your home. But what even happens during completion day?
That’s what we’ll explore in this article. We’ll look at all things related to completion day, such as what happens, what problems can arise, how to avoid them, and much more.
What happens on completion day?
On completion day, the buyer transfers the purchase money to the seller, the homeownership is transferred over, and the keys are handed to the buyer so they can begin moving into their new home. This is facilitated by conveyancing solicitors on both the buyer and seller sides who deal with the paperwork and legal issues, sign off on mortgage completion statements, process the payments, and confirm the transactions.
Leading up to completion day, the buyer’s conveyancing solicitor will verify that the mortgage conditions have been met and request the funds from the mortgage lender. This step won’t be necessary if the buyer is a cash buyer. The seller’s conveyancing solicitor will request a Redemption Certificate if there is a mortgage on the selling property. Both solicitors create completion statements of all payments that have been made and are still due and then issue invoices to be paid upon completion. On the actual completion day, the following steps are taken:
Both solicitors will make final checks. Once everything has been verified, the buyer’s solicitor will transfer the purchase money and any fees to the seller’s solicitor via bank transfer.The seller’s solicitor will confirm if they have received the funds, and if so, they will issue the house keys to the estate agent.At this point, completion day is said to be ended. The buyer will be informed of the completion and will be able to collect the keys from the estate agent, allowing them to begin moving into the property.
How does completion day work in a property chain?
It typically starts with someone who is only buying a property – often a first-time buyer – and ends with a seller who is only selling a property. There could be as many as six to seven home purchases between the first and last transactions. A real-life example of what this may look like is as follows:
A first-time buyer completes the purchase of a home by transferring their funds to the seller.The second person in the chain – the person who sold their home to the first-time buyer – then completes the purchase of their new home using the funds generated from the sale.The third person in the chain – who just sold their property to the second person – then completes the purchase of their new home using the funds generated from the sale.The final person in the chain – who just sold their property to the third person – is only selling their home, with no other property to buy. Once they have received the funds from their sale, the property chain has now ended.
The greater the number of people in the chain, the greater the chance for delays, as it will halt the entire chain of transactions. This is why completion days with a property chain require meticulous planning, so everything runs smoothly.
What can go wrong on completion day?
Unfortunately, things can go wrong on completion day, regardless of how much you try to prevent them.
One of the most common ones is delays when transferring money. When buying properties, typically, a buyer will finance their purchase by combining their own funds with a mortgage. It’s best to transfer these funds to the buyer’s solicitor the day before completion to avoid delays. However, this doesn’t always happen. Sometimes, the mortgage lender is late in making their payment, or the buyer simply doesn’t transfer their money on time.
In order for the money to be transferred from mortgage lenders to a buyer’s conveyancing solicitor and then onto the seller’s solicitor, they must make all three transactions before 4 pm on the same day. If not, they will be completed on the next working day. This is because of the way most bank CHAPs systems work.
Also, this can be pretty difficult to control if you’re in a property chain with numerous buyers and sellers. All it takes is one delay in payment for the entire chain to be delayed.
How to avoid problems on completion day?
The best thing you can do to avoid any problems on completion day is to be organised. Ensure all the paperwork is signed and completed early. Try to send the purchase funds to your solicitor before the completion date – at least a day before. This is just to safeguard yourself in the event that there is a delay in payment.
It’s also good practice to be in constant and regular communication with your solicitor and estate agent. They will be working hard to finalise payments and paperwork before the end of the day. Still, it’s good to check in with them to confirm receipt of funds and confirm completion of any tasks. They will need to contact you to conclude the process so ensure you are easily reachable by phone to resolve any problems.
Lastly, plan ahead for the completion day. Once you’re informed of the date, ensure your belongings are boxed and packed away beforehand. Notify removal companies of your timeline and double-check with them to see if they are still on schedule. Ideally, if you’re the seller, you want to be out of the property by 12 pm, but you’ll want to confirm times with all parties involved so that no one is left waiting around.
What happens if you don’t complete it on completion day?
Typically, issues on completion day are due to payment delays. You can reschedule the payment for the next working day if you don’t transfer the funds on time. However, you will be fined for late payment.
It’s highly unlikely that a buyer will pull out of a house purchase at the last minute once contracts have been exchanged. But, in the event that they do, they will have to cover a large majority of the fees the seller has incurred up until that point.
Examples of this would be the seller’s estate agent fees, conveyancing costs, contract interest on the purchase price, legal fees, removal and hotel fees, etc. The same applies to someone pulling out of the sale ahead of you in the property chain. They will have to pay out the costs incurred by the other parties.
Can you complete and then move on a different day?
It won’t be possible for the seller to move out after the completion date. This is because the completion date signifies the transfer of ownership of the property since the seller has received the funds from the house sale. As such, they must empty the home so that the buyer can begin moving their belongings into the home.
However, the buyer does have flexibility on when they want to move in. They can choose to move into their property on the most convenient day for them since the property is now theirs.
Can you exchange contracts and complete on the same day?
Usually, the completion date will occur between seven to 28 days after exchanging contracts. However, in theory, exchanging contracts and completing can be arranged for the same day.
Exchanging and completing on the same day have distinct advantages. It will speed up the entire conveyancing process, and you won’t have to pay a deposit to your solicitor when you exchange contracts. But, there are also distinct disadvantages.
It can be highly stressful for yourself and your solicitors since you will now have many more tasks to complete in one day. It can also make planning difficult, and you won’t have time to resolve any unforeseen issues. Essentially, you will have to plan as best as possible and hope that everything works out without any problems, which can be impractical.
You may be able to get away with exchanging and completing on the same day if the following apply:
The property is being sold or bought, with vacant possessionYou or the buyer do not need to move in on completion dayYou or the buyer is a cash buyer, and you don’t have to worry about same-day bank transfer deadlinesYou are not part of a chain
On the other hand, it may be more advisable to have two separate days to complete both tasks if the following apply:
You or the buyer needs to move in on completion dayYou are in a long property chainMortgage lenders don’t require a minimum time period between exchange and completionYou still need to figure out the logistics of moving
How is the completion date agreed upon?
The completion date is agreed upon by both the buyer and seller of the property and is usually scheduled for a working weekday. This is so that the purchase money, such as mortgage funds, can be transferred across banks to the conveyancing solicitors.
What is the best day for completion?
It’s common for the completion date to be scheduled for a Friday so that buying party has the entire weekend to finish moving into their new home. However, this does mean that if there are payment delays, you will have to wait until the next working day, which will be the following Monday.
That’s why it’s recommended to agree on the completion date of Monday or Tuesday. This will give you some leeway in case of delays without having to wait an extra few days. Also, you may find that solicitors and conveyancers are less busy earlier in the week, allowing more time to finalise the completion process as quick as possible. Additionally, hire removal companies tend to charge a higher rate closer to the weekend due to demand.
Therefore, a completion date earlier in the week may result in a quicker and cheaper process.
