Introduction
Exchanging contracts on a commercial property sale is a major milestone in the transaction process. Both the buyer and seller must be satisfied that all legal, financial and practical matters have been addressed before proceeding. Understanding how exchange and completion work will help you sell your commercial property with confidence and avoid unnecessary delays.
This guide explains the process of exchange of contracts and completion when selling commercial property in the UK.
When Are You Ready to Exchange Contracts?
You are typically ready to exchange contracts with the proposed purchaser when the following conditions have been satisfied:
- Both buyer and seller are satisfied with the contract documentation
- All legal searches and enquiries have been completed
- Title investigations have been resolved
- Any required planning permissions or consents have been obtained
- Surveys and inspections have been completed to the buyer’s satisfaction
- Finance arrangements have been confirmed by the buyer
- The completion date has been agreed
- Heads of Terms have been incorporated into the legal contract
Once these points are agreed, solicitors will prepare for exchange.
What Happens at Exchange of Contracts?
Exchange of contracts is the point at which the transaction becomes legally binding.
At exchange:
- Signed contracts are formally exchanged between solicitors
- The buyer normally pays a deposit (often 10% of the purchase price)
- The completion date becomes fixed
- Both parties are legally committed to the transaction
From this moment, neither party can withdraw without financial consequences unless contractual provisions allow it.
Selling to another buyer before exchange
Until contracts are exchanged, you are generally free to accept another offer, unless you have entered into an exclusivity (lockout) agreement with the original buyer.
Lockout agreements prevent the seller from negotiating with other parties for a defined period while the buyer carries out due diligence.
These agreements are more common in higher-value or competitive transactions.
Legal differences in Scotland
The legal process differs in Scotland compared with England and Wales.
In Scotland:
- Transactions proceed through a series of formal legal letters known as missives
- The agreement becomes binding once missives are concluded
- Lockout agreements are generally unnecessary
Professional legal advice should always be obtained when dealing with cross-border property transactions.
The period between exchange and completion
Completion does not usually happen immediately after exchange.
The time between exchange and completion is commonly:
- Around 2 to 4 weeks for straightforward sales
- Longer where finance arrangements or complex documentation are involved
The agreed completion date will normally have been set out in the Heads of Terms and confirmed in the contract.
During this period:
- The buyer finalises funding arrangements
- Legal documentation is completed
- Transfer deeds are prepared
- Pre-completion searches may be undertaken
What happens at completion?
Completion is the point at which ownership legally transfers to the buyer.
On the completion date:
- The buyer’s solicitor transfers the remaining purchase funds
- The seller’s solicitor confirms receipt
- Title documents and transfer deeds are released
- Keys and possession are handed over (if vacant possession applies)
- The transaction is legally completed
Once completion occurs, the buyer becomes the legal owner of the commercial property.
Risks if completion does not occur
If a buyer fails to complete after exchange:
- The seller may retain the deposit
- Interest may be charged on late completion
- The seller may claim damages
- The property may be resold
Similarly, if the seller fails to complete, the buyer may pursue legal remedies.
This is why both parties must be confident before exchange.
Practical Tips for Sellers
To ensure a smooth exchange and completion process:
- Provide documentation early
- Respond quickly to solicitor enquiries
- Keep communication open with your agent
- Confirm buyer funding position where possible
- Agree realistic timelines
Preparation and organisation can significantly reduce delays.
Professional Advice
Selling commercial property involves complex legal and financial obligations. Professional advisers typically involved include:
- Commercial property solicitor
- Chartered surveyor
- Commercial agent
- Tax adviser (where required)
Seeking professional guidance helps protect your interests and ensures compliance with legal requirements.
Summary
Exchange of contracts is the point at which a commercial property sale becomes legally binding, while completion is when ownership transfers and funds are received. Understanding the stages involved — and preparing properly — will help you minimise risk and achieve a successful sale.