Code for signing and exchanging property contracts 2024

This code relates to the arrangements to be made between the parties’ solicitors concerning the signing and exchanging of contracts for the sale or leasing of land and buildings in England and Wales.

This code contains three individual protocols that can apply where appropriate. A solicitor who agrees with another solicitor that such a protocol applies will be taken to give an undertaking to comply with that protocol.

Undertakings are treated as given by the individual and their firm and should be given only by individuals who are authorised by their firm to do so (although lack of actual authority will not exonerate the firm from responsibility where the individual has apparent authority) and no undertaking should be given unless the giver is certain that it can be fulfilled.

All undertakings set out in or given pursuant to this code are subject to the limitations set out in this code unless the solicitors expressly agree otherwise.

In this code:

• “seller” means the person or persons who will be at completion entitled to convey the legal and/or equitable title to the property
• “seller’s solicitor” means the solicitor purporting to act for the party named as the seller in respect of the contract
• “signed” by a person includes signed on behalf of that person with their authority and includes electronic signatures where recognised under the law of England and Wales as valid for the intended purpose
• “exchange of contracts” includes making the contract where the parties sign the same contract document (electronic or paper)
• “electronic” in relation to a communication means sent and received using an electronic delivery service and in relation to a document means text or visual images stored and/or sent and received in electronic form, provided that in respect of a contract the electronic form or process used must be recognised under the law of England and Wales as valid for the intended purpose

Unless a solicitor stipulates otherwise, communications mentioned in this code may (except so far as the particular provision or context otherwise requires) be made to that solicitor by telephone or by letter or as an electronic communication made by email or made on an electronic platform being shared by agreement between the parties’ solicitors (including any application, software or network designed to facilitate property transactions).

The Immediate Exchange Protocol 2024 replaces Formulae A and B and the Release of Contracts Protocol 2024 replaces Formula C of the Law Society’s formulae for exchanging contracts.

If the parties’ solicitors agree with each other to comply with this code in relation to a particular transaction, they are to confirm this to each other in writing by letter or electronic communication.

This confirmation will constitute an undertaking by each of the solicitors to comply with this code and to observe and perform their respective obligations under it.

The parties’ solicitors are to confirm to each other what they have agreed concerning:

1. the text of the contract, including any additions or variations to the original text and any attachments (see Note 1);
2. the deposit, including:
   1. the amount of the deposit to be specified in the contract (see Note 2);
   2. whether any deposit money:
      1. is to be remitted to the seller’s solicitor before exchange of contracts to be held by the seller’s solicitor to the order of the buyer’s solicitor until exchange of contracts; and/or
      2. whether any deposit money is to be held after exchange of contracts to the order of the seller’s solicitor instead of being paid to the seller’s solicitor at that time;

(and in either case see the Hold to Order Protocol 2024);

3. the media to be used for the contract (such as wet-ink paper originals signed in separate parts or using a particular electronic format and/or platform such as PDF, DocuSign – see Note 3); and the procedure to be used for exchange (such as telephone, email or an electronic platform); and
4. where an electronic format and/or platform is to be used, the arrangements for:
   1. the signing of the contract by the parties;
   2. the method of effecting exchange; and
   3. the steps to be taken by the solicitors after exchange of contracts, in place of a physical exchange of contracts (see the post-exchange obligations).

Where arrangements are agreed under (4) above, both solicitors must comply with them unless otherwise agreed.

A solicitor who, before exchange of contracts, receives or has electronic control of a contract signed by the other solicitor’s client:

1. is to hold it to the order of the other solicitor in accordance with the Hold to Order Protocol 2024 until exchange of contracts takes place or until it is released under the Release of Contracts Protocol 2024 (if applicable) or until it is returned to the possession or control of the other solicitor; and
2. is not to date it until exchange of contracts takes place under the Immediate Exchange Protocol 2024 or is effected under the Release of Contracts Protocol 2024.

No contract is to be taken to exist between the parties before exchange of contracts takes place under the Immediate Exchange Protocol 2024 or under the Release of Contracts Protocol 2024.

A seller’s solicitor who, before exchange of contracts, receives any deposit money from the buyer’s solicitor is, unless otherwise agreed, to hold it to the order of the buyer’s solicitor in accordance with the Hold to Order Protocol 2024 until exchange of contracts or until it is returned to the buyer’s solicitor (see Note 4).

When there is to be only a short period between exchange and completion, it is often the practice that the seller’s solicitor agrees that the buyer’s solicitor will hold the deposit money to the order of the seller’s solicitor. This may also apply in a chain of transactions (see Note 2). If this is applicable:

1. the buyer’s solicitor, when obtaining the client’s authority to exchange contracts, should also obtain authority from the client to hold the deposit money to the order of the seller’s solicitor as an alternative to paying it to the seller’s solicitor (see Note 6);
2. any such holding to order is to comply with the Hold to Order Protocol 2024; and
3. a provision should be included in the contract so as to vary any standard condition that requires payment of the deposit to the seller’s solicitor on exchange of contracts (see Note 5)

The individuals dealing with the exchange of contracts at the firms of solicitors acting for each party are to confirm to each other:

1. their names;
2. that they as individuals are authorised by the seller or buyer that they represent to exchange contracts or to release the contract for exchange (see Note 6) and are authorised by their firm to give the undertakings contained in this code or the relevant protocol (see Note 7);
3. that they hold a contract signed by the seller or buyer that they represent (or where applicable that one of them holds a contract signed by both seller and buyer) that is in the form and medium that the solicitors have agreed and incorporating all agreed additions or variations to the original text and all agreed attachments and so that, where the contract is in parts, the parts are identical;
4. where the contract permits alternative methods of payment, by which of those methods any deposit money payable is to be remitted (see Note 8);
5. the agreed completion date;
6. what should be inserted in any other blank spaces in the contract; and
7. what steps each solicitor is to take under the post-exchange obligations, including if and how documents are to be sent and anything to be done in place of a physical exchange of contracts;

and they are to record the matters so agreed.

The Immediate Exchange Protocol 2024 is to be used for an immediate exchange of contracts.

The Release of Contracts Protocol 2024 is to be used for one party’s solicitor to release a contract to the other party’s solicitor for exchange later that day (such as in a chain).

Each of these can apply whether the same solicitor holds both signed parts of the contract or a single contract signed by both parties or controls an electronic platform holding a contract signed by both parties, or the solicitors each hold or control their respective clients’ signed parts of the contract.

These protocols are set out below.

As soon as practicable following exchange of contracts:

1. where any deposit money is to be paid to the seller’s solicitor, the buyer’s solicitor is to pay that money to the seller’s solicitor’s bank using the agreed mode of payment;
2. a solicitor who holds a paper contract signed by their client must:
   1. make an electronic image of the contract and send the image by email to the other solicitor; and
   2. send the actual contract to the other solicitor;
3. a solicitor who holds a paper contract signed by both parties must make an electronic image of the contract and send the image by email to the other solicitor;
4. where a contract is in an electronic format or on an electronic platform, each solicitor must take the actions in place of physical exchange that the solicitors agreed as part of the arrangements for electronic signing and exchange.

Any paper contract to be sent under these obligations is to be sent either by first class post or (where the intended recipient has a document exchange address) through a document exchange, unless otherwise agreed between the solicitors.

“As soon as practicable” means on the same day or (if that is not possible) the next working day, but subject to any delays that are not reasonably avoidable and result from compliance with legislation.

Each undertaking set out in or given pursuant to this code and its protocols is to be taken to be subject to the following limitations (unless otherwise agreed between the solicitors):

1. In the case of each such undertaking, a solicitor will not be liable for failure to comply with it at any time when compliance would be unlawful.
2. In the case of an undertaking relating to a sum of money, a solicitor will not be in breach of the undertaking or be liable to any person as a result of any act, omission, failure, fraud, delay, negligence, insolvency or default of any bank, financial institution, clearing or payments system, or regulatory, governmental or supra-national body or authority (other than where it arises from that solicitor’s own default or misconduct).

1. Where a document (paper or electronic) is held by a solicitor to the order of another solicitor, then subject to any express agreement made between the solicitors or any applicable provision contained in any relevant subsisting contract, the solicitor holding the document is to be taken to give an undertaking in respect of that document:
   1. that is held on behalf of and is to be treated as being in the effective control and constructive possession of that other solicitor;
   2. that it will not be amended or dated except under the direction of that other solicitor; and
   3. that if on paper it will be sent to that other solicitor as soon as practicable after demand, and if electronic it will be dealt with as soon as practicable as that other solicitor may properly direct.
2. Where a sum of money (such as a deposit) that is in the actual possession of a solicitor is held to the order of another solicitor, then subject to any express agreement made between the solicitors or any applicable provision contained in any relevant subsisting contract, the solicitor holding that sum is to be taken to give an undertaking in respect of that sum:
   1. that it is held on behalf of and is to be treated as being in the effective control and constructive possession of that other solicitor; and
   2. that (subject to paragraphs 6 and 7) it will be paid to that other solicitor:
      1. as soon as practicable if it is demanded (and, in the case of deposit money held to the order of the seller’s solicitor, in any event not later than in time for completion to take place);
      2. using a method of payment complying with any relevant provision of any subsisting contract or, in the absence of such a provision, using the same method of payment by which the money was received; and
      3. together with any interest that the paying solicitor may be liable to pay on it (see Note 9).
3. Where:
   1. a sum of money is paid by a buyer (A) to their solicitor to be used as the deposit under a contract between A and a seller (B) which contains a condition allowing B to use the deposit as the deposit when buying another property;
   2. A’s solicitor agrees with B’s solicitor that, from exchange of contracts between A and B, A’s solicitor will hold that sum to the order of B’s solicitor as the deposit under that contract in accordance with this protocol;
   3. B’s solicitor discloses to the solicitor acting for the seller (C) of the property being purchased by B the arrangement mentioned at paragraph (b) including the amount held by A’s solicitor and the fact that A’s solicitor will retain that sum and hold it to the order of B’s solicitor; and
   4. B’s solicitor and C’s solicitor agree that, as from exchange of contracts between B and C, B’s solicitor will hold that sum to the order of C’s solicitor as the deposit under that contract in accordance with this protocol;

   then

   1. A’s solicitor, under the arrangement mentioned in paragraph (b) above, is to be taken to give an undertaking in respect of that sum to comply with the obligations set out in paragraph 2 of this protocol; and
   2. B’s solicitor, under the arrangement mentioned in paragraph (d) above, is to be treated as undertaking in respect of that sum (but subject to paragraphs 5 and 6):
      1. to hold on behalf of C’s solicitor the right to demand payment of that sum from A’s solicitor;
      2. as soon as practicable if C’s solicitor so demands and in any event not later than in time for completion to take place, to demand payment of that sum from A’s solicitor and take all reasonable and proper steps to obtain such payment; and
      3. as soon as possible after receiving payment, to pay that sum to C’s solicitor in accordance with paragraphs 2(2)(ii) and (iii) of this protocol;

but if B’s solicitor enters into the arrangement mentioned in paragraph (d) without having made all the disclosures mentioned in paragraph (c), B’s solicitor shall be liable to C’s solicitor instead under paragraph 2 of this protocol which shall apply as if the sum in question had been in B’s solicitor’s actual possession.

4. Where the chain of transactions extends beyond party C, the same arrangements as are envisaged by paragraph 3 may be replicated (with any necessary consequential adaptations) but only if:
   1. this protocol is made to apply in each case; and
   2. in each case the seller’s solicitor is given details of the solicitor who will hold the deposit;

and as soon as practicable after such exchange of contracts in the chain, any solicitor who has agreed to hold to another solicitor’s order a deposit that they do not actually hold must ensure that details of such holding to order are given to the solicitor or solicitors holding the deposit.

5. If completion money is set to a seller’s solicitor to be held to the order of the sender and part of that money is deposit money that the sender is holding to order, that part remains subject to the terms on which the sender was holding it to order.
6. If a contract is rescinded at a time when the deposit money under it is being held to order under paragraphs 2, 3 and/or 4 of this protocol, the money shall continue to be held by the solicitor holding it at that time until the entitlement to the money has been agreed between all potential claimant parties or decided by the court, after which it is to be remitted as soon as practicable to the solicitors of the person or persons so entitled.
7. The undertakings set out in this protocol are subject to the limitations on undertakings specified in the code of which this protocol forms part.
8. In this protocol, “as soon as practicable” means on the same day or (if that is not possible) the next working day, but subject to any delays that are not reasonably avoidable and result from compliance with legislation.

1. When ready and authorised to do so, the parties’ solicitors are to effect an exchange of contracts having immediate effect by agreeing with each other:
   1. that the agreed completion date and any other agreed insertions are to be inserted into the contract (if not already done); and
   2. that contracts are exchanged with immediate effect in accordance with this protocol.

The steps mentioned above shall be effected using the procedure for exchange that the solicitors have agreed and may be made electronically where both solicitors agree or where they are using a shared electronic platform that enables it to be done.

2. Upon exchange being so agreed, this constitutes the making of the contract (see Note 10) and any solicitor holding or controlling a signed contract is to be taken to give an undertaking:
   1. immediately to insert the agreed completion date and the date of the contract and any other agreed insertions and complete any memorandum provided for recording details of the arrangements under which exchange takes place (except so far as any of these are done automatically on an electronic platform); and
   2. to hold any contract signed by their client to the order of the other solicitor in accordance with the Hold to Order Protocol 2024, or to hold on behalf of both parties any single contract signed by them both; and
   3. to comply with the applicable post-exchange obligations in this code.
3. When any deposit money is held by the seller’s solicitor to the order of the buyer’s solicitor when exchange of contracts takes place, it immediately ceases to be held to the order of the buyer’s solicitor and is to be held in accordance with the terms of the contract.
4. The undertakings set out in this protocol are subject to the limitations on undertakings specified in the code of which this protocol forms part.

1. When ready and authorised to do so (see Note 7), the releasing solicitor is to release for later exchange the contract signed by the seller or buyer that they represent by:
   1. confirming to the other solicitor that the contract signed by the seller or buyer that they represent is released to the other solicitor in accordance with this protocol for exchanging later on the same day;
   2. stipulating the latest time for exchange of contracts on that day; and
   3. stipulating the mode or alternative modes of notification that the other solicitor must use to effect exchange of contracts (see Note 11);

   and they are to record the time and details of these arrangements.

The steps mentioned above shall be effected using the procedure for exchange that the solicitors have agreed and may be made electronically where both solicitors agree or where they are using a shared electronic platform that enables it to be done.

2. Upon so releasing a contract, the releasing solicitor is to be taken:
   1. irrevocably to authorise the solicitor who receives the confirmation to effect exchange of contracts later that day (but not later than the stipulated latest time for exchange, time being of the essence) by giving the releasing solicitor a notification in the stipulated mode, that the contract is exchanged;
   2. in cases where the releasing solicitor has stipulated that the notification of exchange of contracts must be made by telephone to a named person (or to one of alternative named persons), to give an undertaking that at least one such named person will be available to receive the telephone call at any time until the stipulated latest time for exchange of contracts; and
   3. in cases where the releasing solicitor holds the contract signed by their client, to give an undertaking that such contract will be held available for exchange of contracts until exchange of contracts is effected or the stipulated latest time for exchange of contracts has elapsed.
3. If and when an exchange of contracts is notified in the stipulated manner by the stipulated latest time for exchange of contracts, this effects exchange of contracts and constitutes the making of the contract (see Note 6) and a solicitor holding or controlling any signed contract is to be taken as giving an undertaking:
   1. immediately to insert the agreed completion date and any other agreed insertions and the date of the contract and complete any memorandum provided for recording details of the arrangements under which exchange takes place (except so far as any of these are done automatically on an electronic platform);
   2. to hold the contract signed by their client to the order of the other solicitor in accordance with the Hold to Order Protocol 2024 or to hold on behalf of both parties any contract signed by them both; and
   3. to comply with the applicable post-exchange obligations in this code.
4. If an exchange of contracts is not notified in accordance with this protocol by the stipulated latest time for exchange of contracts, the authority to exchange contracts immediately lapses and any contract signed by the releasing solicitor’s client that is held or controlled by the other solicitor is then held to the order of the releasing solicitor in accordance with the Hold to Order Protocol 2024.
5. The undertakings set out in this protocol are subject to the limitations on undertakings specified in the code of which this protocol forms part.

1. Attachments may include items such as an agreed form of transfer, a list of fittings and contents or a copy of a tenancy agreement.
2. Solicitors should advise their client on any provisions allowing the seller to use deposit money on a related transaction and any circumstances where the deposit will be less than 10% of the selling price (see the Law Society’s Conveyancing Handbook, paragraphs A1.8.8, B17.2 and B17.11.3). [insert updated paragraphs]

Where there is a chain of transactions, the deposit paid by the buyer at the start of the chain is often for convenience passed up the chain and used as the deposit for each of the contracts (usually pursuant to condition 2.2.5 of the Standard Conditions of Sale, 5th edition) even though it will often be less than 10% of the purchase prices higher up the chain.

Parties in a chain who take advantage of this arrangement and do not themselves provide the deposit money on their purchase should be advised that, if they are unable to complete their purchase on the agreed completion date, even if the delay is caused by their buyers, they may be required to pay on that date any sum necessary to top up the deposit money on their purchase to 10% of the purchase price (Standard Condition 6.8.3(b)).

Buyers who pay deposits under purchase contracts containing Standard Condition 2.2.5 (or equivalent provisions) should be advised that they may have greater difficulty in obtaining repayment of their deposits if they rescind their purchase contract due to the seller’s default than if their deposit had to be retained by their seller’s solicitor, as was traditional many years ago.

If a deposit paid by the buyer at the beginning of the chain is passed along the chain to be used as the deposit under one or more other contracts and one of those contracts fails to complete due to the default of its buying party, the seller under that contract may be able to take and keep the deposit money , which will then not be available for passing back along the chain if any of the earlier contracts in the chain fail to complete.

Nevertheless, it is normal for buyers to accept this risk; the Standard Conditions of Sale have allowed the passing of deposit money along chains since the first edition in 1990. This is generally accepted by buyers because it makes it easier for parties to achieve exchanges of contracts throughout a chain and it is rare (but not unknown) for such contracts to fail to complete. The Conveyancing Protocol of the Law Society’s Conveyancing Quality Scheme discourages amendments to the Standard Conditions.

Sellers who are asked to accept deposits of less than the traditional 10% should be advised that, if they rescind their sale contract due to the buyer’s default, the amount of the buyer’s deposit that is available for them to take and keep (towards compensating them for the failed sale) will be less than if they had insisted on the traditional 10%. It may of course be less readily available to them in any event if they have used it as or towards the deposit on their own purchase, particularly if it is then passed further along the chain.

3. The exchange of separate wet-ink signed paper original parts of the contract is still widespread practice but other procedures such as using PDF scans of a wet-ink signed paper contract, the use of electronic signatures or an electronic contract signed on a computer or other electronic device are also common. Solicitors using such a form of contract should satisfy themselves that it meets the legal requirements for a property contract in section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 and are recommended to refer to the Law Society’s practice note on execution of a document using an electronic signature and Practice Guide 82 electronic signatures accepted by HMLR.
4. SRA Accounts Rules 2011, rules 2.1(b) and 5.1(b), require a solicitor receiving money from a person other than their client to hold it as client money of the third party and withdraw it only following instructions from that third party.
5. The following special condition could be used in a contract under the Standard Conditions of Sale, 5th edition (2018 revision):

“The deposit is to be held by the buyer’s solicitor to the seller’s solicitor’s order under the Law Society’s Hold to Order Protocol 2024 and is to be treated as paid for the purposes of conditions 2.2.1 and 6.8.3(a)."

6. Solicitors do not as a matter of law have implied authority to release contracts for later exchange and should always ensure that they have the client’s express authority to use the Release of Contracts Protocol 2024. A suggested form of authority is set out below. It should be adapted to cover any special circumstances:

“I/We ……… understand that my/our sale and purchase of ……… are both part of a chain of linked property transactions, in which all parties want the security of contracts which become binding on the same day.

I/We agree that you should make arrangements with the other solicitors or licensed conveyancers involved to achieve this.

I/We understand that this may involve each property-buyer offering, early on one day, to exchange contracts whenever, later that day, the seller so requests, and that the buyer’s offer is on the basis that it cannot be withdrawn or varied until a specified time on that day.

I/We agree that when I/we authorise you to exchange contracts, you may agree to exchange contracts on the above basis and give any necessary undertakings to the other parties involved in the chain in accordance with the Law Society’s Release of Contracts Protocol 2024 and that my/our authority to you cannot be revoked throughout the day on which the offer to exchange contracts is made.”

7. These individuals (together with their firm) are referred to as the relevant party’s solicitor in this code and its protocols whether or not the individuals are solicitors.
8. Where payment is required to be made by electronic payment, this might encompass CHAPS, BACS, faster payment or other mode of remittance.
9. Interest may be payable under the SRA Accounts Rules 2011, rule 7.
10. See Domb v Isoz [1980] Ch 548 CA and condition 2.1.2 of the Standard Conditions of Sale 5th edition (2018 revision) and condition 3.1.2 of the Standard Commercial Property Conditions 3rd edition (2018 revision).
11. Notifications of exchange under the Release of Contracts Protocol 2024 should normally be required to be made by telephone to a named person, particularly where that person is handling a related transaction on which a notification of exchange must be given within a limited time, unless that will happen automatically under a shared electronic platform.
12. See also the Law Society’s practice note on undertakings.