Are you selling your property
IF YOU ANSWER YES TO THESE QUESTIONS YOU MAY JUST WANT TO READ THIS VERY IMPORTANT INFORMATION!!
As a Seller of residential Property, your main responsibility is to ensure that ownership of the Property can be transferred to the Buyer immediately after Settlement. For Sellers who have a mortgage over the Property, this means that you need to arrange for that mortgage to be released. This blog will explain how you can obtain the all-important release of mortgage, it will take a brief look at the ramifications if you don’t have it available at settlement, and we will let you know the magical, mind-blowing secret to making sure you will have the release ready on time, every time*.
Think back to when you purchased your house. Do you remember the never ending forest of paperwork that you filled out? Maybe you had to do it more than once (missed signatures, coffee spilled over the papers, your dog ate it…we have heard plenty of stories)! Well the bad news is that when you sell your Property, you will again need to fill in some paperwork (so put that coffee in a safe space and keep the dog outside for a bit). Sorry. But the good news is, the amount of paperwork this time around is less likely to give you terrible hand cramps that are going to keep you up at night, making you wonder why on earth you got into the property market in the first place. In fact, the main document you need to fill out is generally no more than 5 pages. That document is called a “Discharge Authority”. Some banks will let you download this form from their website, but if not, you can contact your bank manager and ask for a copy. The Discharge Authority notifies your bank that the sale is imminent, provides various details about the sale (including sale price, settlement date, etc), and usually gives scope for you to authorise your bank to contact your solicitor to arrange settlement. Then the bank and your solicitor (us, we hope!) take care of the rest. We are happy to help you prepare this form, but ultimately it is up to you to complete it and send it to your bank, because until you do that the bank won’t talk to us.
Of course, unless your mortgage is completely paid out (well done, you!), your bank wants something in exchange for releasing the mortgage. You guessed it. Money! Your bank will only hand over the release once it receives an amount that is sufficient to pay out the amount owing on your mortgage. In practice, what will happen is your bank will attend settlement on the agreed date (we will be there too, on your behalf because we know you have better stuff to do), and will hand over the release in exchange for the sale funds. The buyer won’t hand over the money unless your bank hands over the release, so it is important to ensure that the release document is ready in time for the settlement date. On top of that, in Queensland, time is of the essence in most residential real estate transactions. The short explanation is that if you can’t settle (i.e. you can’t hand over the release of mortgage) on the due date, the Buyer can sue you for damages. That’s a scary story for another time.
This brings us to our final point – the “magical, mind-blowing secret” we promised you earlier. It’s actually really easy. Here it is: fill out your discharge authority as soon as physically possible, after the Contract has been signed. We don’t mean the week before settlement, we don’t mean the day after your Buyer has confirmed their finance (and various other conditions you have kindly agreed to give them). We mean straight away. The reason is that banks have certain timeframes (which, helpfully, differ depending on which bank you are with) for preparing release documents. Plus, banks are busy people too. So the best thing that you can do to ensure your bank is ready to release the mortgage at settlement is to give them as much time as possible. They will love you for it, and so will we.
If you have any other questions about this process, please contact our friendly, experienced, and funny (see above) conveyancing team.
*Here it is. The expected disclaimer where we tell you that we can’t really promise that our secret works. If it did, we probably wouldn’t hand it out for free. But to be fair, it should work most of the time. We think.
This information is provided as a general guide only and should not be used or relied upon by any person without obtaining legal advice in relation to their own circumstances.