Progressing to exchange of contracts - Law Society Conveyancing Protocol

Learning Outcomes

After reading this article, you will be able to explain the purpose and structure of the Law Society Conveyancing Protocol in residential transactions, identify the legal significance of exchange of contracts, describe the main steps and documentation required before exchange, and outline the respective duties of solicitors for buyer and seller. You will also understand how risk passes on exchange and how the Protocol supports a compliant, efficient process.

SQE1 Syllabus

For SQE1, you are required to understand the practical application of the Law Society Conveyancing Protocol in residential conveyancing. Focus your revision on:

  • The function and scope of the Law Society Conveyancing Protocol in residential property transactions
  • The legal effect and process of exchange of contracts
  • The structure and content of the contract, including standard and special conditions
  • The passing of risk and insurance requirements at exchange
  • The respective roles and duties of buyer’s and seller’s solicitors in progressing to exchange
  • The documentation and checks required before exchange, including title, searches, and disclosures

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

  1. What is the legal effect of exchanging contracts in a residential conveyancing transaction?
  2. When does the risk of damage to the property usually pass from seller to buyer under the Standard Conditions of Sale?
  3. Name three key documents that must be checked or provided before exchange of contracts.
  4. What is the role of the Law Society Conveyancing Protocol in the context of the SQE1 exam?

Introduction

The Law Society Conveyancing Protocol provides a standardised framework for residential conveyancing in England and Wales. It sets out the recommended steps for solicitors acting for buyers and sellers, aiming to ensure a consistent, transparent, and efficient process. A central feature is the procedure for progressing to exchange of contracts, which is the point at which the transaction becomes legally binding and risk typically passes to the buyer. Understanding the Protocol and the legal implications of exchange is essential for SQE1.

The Law Society Conveyancing Protocol: Scope and Purpose

The Protocol is designed for the sale and purchase of residential property by owner-occupiers. It is widely adopted by firms accredited under the Conveyancing Quality Scheme (CQS) and is often used even where not expressly adopted. The Protocol is not intended for new build purchases or commercial transactions.

Key Term: Law Society Conveyancing Protocol
The Law Society Conveyancing Protocol is a set of recommended procedures and standard documents for residential conveyancing, aiming to encourage best practice and consistency among solicitors.

Pre-Exchange Preparations

Before exchange, solicitors must ensure that all legal, practical, and financial matters are in order. The Protocol emphasises the importance of thorough preparation to avoid delays or disputes after exchange.

Title Investigation and Deductions

The seller’s solicitor must prove the seller’s right to sell the property by providing up-to-date official copies of the register (for registered land) or an epitome of title (for unregistered land). Any defects, restrictions, or encumbrances must be identified and disclosed.

Key Term: deduction of title
The process by which the seller’s solicitor provides evidence of the seller’s ownership and right to sell, typically through official copies or an epitome of title.

Searches and Enquiries

The buyer’s solicitor is responsible for conducting all necessary searches and raising pre-contract enquiries. These include:

  • Local authority search (LLC1 and CON29)
  • Water and drainage search
  • Environmental and flood searches (where relevant)
  • Pre-contract enquiries of the seller (Property Information Form (TA6), Fittings and Contents Form (TA10), and Leasehold Information Form (TA7) if applicable)

Contract Preparation

The seller’s solicitor drafts the contract, incorporating the Standard Conditions of Sale (Fifth Edition – 2018 Revision) and any special conditions required for the transaction. The buyer’s solicitor reviews the draft, requests amendments if needed, and ensures the contract reflects the parties’ agreement.

Key Term: Standard Conditions of Sale
A set of pre-drafted terms commonly incorporated into residential property contracts, covering matters such as deposit, title, completion, and risk.

Structure and Content of the Contract

The contract typically consists of:

  • Particulars of sale (property address, price, parties, title number)
  • Standard Conditions of Sale
  • Special conditions (to address specific issues, e.g., reduced deposit, title defects, or agreed variations)
  • List of fixtures, fittings, and contents

Key Term: special conditions
Additional terms in the contract tailored to the specific transaction, which override or supplement the standard conditions.

Duties of the Solicitors

Seller’s Solicitor

  • Drafts and issues the contract and supporting documents
  • Deduces title and discloses all relevant matters
  • Responds to pre-contract enquiries
  • Arranges for the contract to be signed by the seller (and any adult occupier, if required)
  • Negotiates and agrees the completion date

Buyer’s Solicitor

  • Reviews the contract and supporting documents
  • Conducts all relevant searches and raises enquiries
  • Advises the buyer on risks, title, and contractual terms
  • Ensures mortgage offer and funds are in place
  • Arranges for the contract to be signed by the buyer and the deposit to be available

Exchange of Contracts

Exchange is the point at which the contract becomes legally binding. It is usually effected by the solicitors, often by telephone using one of the Law Society’s formulae (A, B, or C), followed by the physical exchange of signed contracts.

Key Term: exchange of contracts
The formal process by which buyer and seller become legally bound to complete the transaction on the agreed terms and date.

Legal Effect of Exchange

  • Both parties are contractually committed to complete on the agreed date
  • The buyer pays the deposit (usually 10% of the purchase price)
  • The risk of damage to the property passes to the buyer (unless otherwise agreed)
  • The completion date is fixed

Key Term: risk
Under the Standard Conditions of Sale, the risk of loss or damage to the property passes from seller to buyer at exchange of contracts.

Passing of Risk and Insurance

Under the Standard Conditions of Sale, the buyer becomes responsible for insuring the property from the moment of exchange. The seller is under no obligation to insure unless the contract or a lease requires it.

Exam Warning

If the buyer fails to arrange insurance from exchange, they may be unable to recover losses if the property is damaged before completion. Always advise clients to have insurance in place immediately on exchange.

Completion Date and Practical Steps

The completion date is agreed before exchange and inserted into the contract. Both solicitors must ensure that all pre-completion steps (e.g., mortgage funds, final searches, signed transfer deed) can be completed in time.

Worked Example 1.1

Scenario:
A buyer exchanges contracts on a house purchase. Two days later, a fire damages the property. Who bears the loss?

Answer:
Under the Standard Conditions of Sale, risk passes to the buyer at exchange. The buyer must claim on their own insurance, not the seller’s.

Worked Example 1.2

Scenario:
The buyer’s solicitor discovers a restrictive covenant affecting the property that prevents business use, but the buyer intends to run a business from home. What should the solicitor do before exchange?

Answer:
The solicitor should raise the issue with the seller’s solicitor, advise the buyer of the restriction, and consider negotiating a special condition, seeking a release, or obtaining indemnity insurance if appropriate.

Summary Table: Key Stages in Progressing to Exchange

StageSeller’s Solicitor DutiesBuyer’s Solicitor Duties
Initial InstructionsTake instructions, check ID, obtain EPCTake instructions, check ID, review funding
Pre-contractDraft contract, deduce title, respond to enquiriesReview contract, conduct searches, raise enquiries
Contract AgreementNegotiate terms, arrange signingNegotiate terms, arrange signing, collect deposit
Exchange of ContractsExchange signed contracts, notify partiesExchange signed contracts, notify parties, arrange insurance

Key Point Checklist

This article has covered the following key knowledge points:

  • The Law Society Conveyancing Protocol sets out best practice for residential conveyancing in England and Wales.
  • Exchange of contracts is the point at which the transaction becomes legally binding and risk passes to the buyer.
  • The seller’s solicitor must deduce title, disclose all relevant matters, and draft the contract.
  • The buyer’s solicitor must conduct searches, raise enquiries, and ensure the buyer is ready to proceed.
  • The contract consists of particulars, standard conditions, and any special conditions.
  • The deposit is usually 10% and is paid at exchange.
  • Insurance must be arranged by the buyer from exchange, as risk passes at that point.
  • Both solicitors must ensure all pre-exchange steps are complete before progressing to exchange.

Key Terms and Concepts

  • Law Society Conveyancing Protocol
  • deduction of title
  • Standard Conditions of Sale
  • special conditions
  • exchange of contracts
  • risk
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Pleased to share that I have successfully passed the SQE1 exam on 1st attempt. With SQE2 exempted, I’m now one step closer to getting enrolled as a Solicitor of England and Wales! Would like to thank my seniors, colleagues, mentors and friends for all the support during this grueling journey. This is one of the most difficult bar exams in the world to undertake, especially alongside a full time job! So happy to help out any aspirant who may be reading this message! I had prepared from the University of Law SQE Manuals and the AI powered MCQ bank from PastPaperHero.

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Senior Associate at Trilegal