The sales process can undoubtedly be a stressful time for sellers. With pre sale preparations, home opens, inspections and price negotiations, sellers often feel like sitting back and breathing a sigh of relief once an Offer and Acceptance is agreed upon.
However, it’s vital that sellers are made aware of their key responsibilities and the critical items that must be completed once they have that all important deal on the table, because the settlement process is not the time to take your eye off the ball.
This was clearly illustrated during a recent case when some uninformed sellers failed to get their Discharge of Mortgage underway, leaving them exposed to hefty penalty interest charges when their settlement was delayed.
In this case, our clients, Mr and Mrs Paully, (not their real names) were downsizing and chose to purchase a smaller property in their local area. Their Offer and Acceptance included a clause stipulating that settlement was due 14 days from Finance Approval.
As it turned out, the Paully’s Finance Approval came in earlier than expected, consequently bringing forward the anticipated settlement date. Unfortunately at this point, we found that the sellers had not even commenced their Discharge of Mortgage process.
As a consequence of the sellers’ inaction, settlement was delayed and they were liable for some heavy penalty interest charges.
The salient point from this story, is for sellers to get their Discharge of Mortgage underway as soon as there is an Offer and Acceptance on their property instead of waiting for the deal to go unconditional, if they wish to avoid delays.
To fulfil their responsibilities during settlement, sellers need to be aware that a Discharge of Mortgage can take up to 10 to 12 business days to complete and involves the following steps:
1. Contacting the bank or lender to inform them that they are ready to end / discharge their mortgage.
2. Provide the bank or lender with a completed discharge authority and necessary documentation.
3. Inform the bank or lender of the scheduled settlement date. They will send through a final pay-out figure (including a fee for discharging the mortgage).
4. Pay any outstanding amounts at settlement.
5. A Discharge of Mortgage document is provided and handed over at settlement to be lodged.
Agents can assist in advising all parties to keep their eyes on the ball during the settlement process to avoid unnecessary delays.
Image by Sysop via Flickr.