Dangers of dropping the ball during Settlement Process – Example 2 of 2
Following on from our Part 1 Article about the dangers of losing focus during the settlement process, specifically regarding Buyers Inspection awareness – here is a Part 2 real-life example emphasizing the importance of not dropping the ball once the Offer and Acceptance has been signed.
To reiterate: We know the sales process can be an extremely stressful time for sellers… and the temptation to sit back and relax upon acquiring an acceptance is understandable… but there are still a number of key responsibilities that must be completed during the settlement process, and it can prove costly for sellers to lose focus.
Example 2 – Discharge of Mortgage Mishap
In this example, Mr. and Mrs. Lee (not real names) were going through the stressful process of selling their family home… riding the relief of signing their Offer and Acceptance, the Lee’s momentarily overlooked the clause stipulating that settlement was due within 14 days from Finance Approval…
As it eventuated, the Buyer’s Finance Approval came through earlier than expected, bringing forward the stipulated settlement date. Unfortunately for the Buyers, they learned at this point that Mr. and Mrs. Lee were yet to commence their Discharge of Mortgage process… a process that can often take over 2 weeks to complete.
Consequently, the settlement was delayed, and all of a sudden the Lee’s found themselves liable for some pretty hefty penalty interest charges!
The lesson to be learned from this obviously being: Sellers should get their Discharge of Mortgage underway as soon as there is an Offer and Acceptance made on the property if they wish to avoid delays. Sellers should be aware that a Discharge of Mortgage can take 10 – 12 business days, and involves the following steps:
1) Initiate contact with your Bank or Lender to inform that you’re ready to end/discharge the mortgage;
2) Your Bank or Lender will need to be provided with all the necessary documentation, including a completed discharge of authority;
3) Be sure to inform the Bank or Lender of the scheduled settlement date, in order for them to send a final payout figure, including any discharge of mortgage fees;
4) Pay any outstanding amounts prior to settlement;
5) Finally, a Discharge of Mortgage document is provided, and handed over at settlement to be lodged.
As you can see from this example, dropping the ball upon signing the Offer and Acceptance can quite easily delay settlement process, and incur penalty charges. An experienced Settlement Agent like Vicki Philipoff can ensure you are informed and on-top-of all proceedings during the settlement process, and avoid any unnecessarily nasty/expensive delays.