"when these are returned i know we then have 28 days to complete or else we can get hit with interest penalties"
The sequence is vendors solicitor (VS) issues contracts to purchasers solicitor (PS). The contracts will show the closing date - which can be negotiated. It could be 4 days away or 4 months away - it depends on the positions of the parties.
Purchaser signs contracts and PS returns to VS. Vendors sign both contracts, VS cashes the deposit cheque and then VS returns the signed contracts to PS. It is only at this stage that there are binding contracts in existence. Until then either party is free to walk away.
Once contracts are signed, there is an exchange of information with all the parties working towards the agreed closing date. Only after the closing date can the 28 day completion notice be served. At the expiration of that date, the parties have choices as to what to do depending on who served the notice. It is then quite complex and an awful lot depends on what people want to do - complete? walk away?
And yes, people do pay penalties - we try and avoid it but sometimes it happens.
mf