Streetworks Practice Test & Exam Prep | United Kingdom

What is the primary legal effect of exchanging contracts in an English residential property transaction?

Legal title officially transfers to the buyer Both buyer and seller enter into a binding legal obligation to complete the transaction The estate agent's commission becomes refundable The mortgage offer is automatically locked and cannot be withdrawn

Correct Answer:

Both buyer and seller enter into a binding legal obligation to complete the transaction

Explanation:

Exchange of contracts creates a legally binding contract between buyer and seller, making withdrawal subject to severe contractual penalties (usually loss of deposit).

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