Rural property settlement including transfer/discharge of mortgage over water shares
We have just acted for an incoming mortgagee.
Vendor sold rural property (together with water shares) to Purchaser for over $2.5m. The Contract of Sale included a disaggregation of purchase price between the value of the land and the value of water shares.
Vendor's mortgagee had a mortgage over the land and also a separate mortgage over the water shares.
All parties initially commenced the matter on Pexa, but the existing mortgagee withdrew saying that it had to be paper settlement (complex duty assessment due to disaggregation, and because you can't deal with water shares on Pexa). The mortgagee was discharging their mortgages over both the property and water shares in return for payment of their total outstanding loan amount).
We acted for the incoming mortgagee (personal lender, not a bank) and went to register the Transfer of Land, Discharge of Mortgage and our new mortgage at Land Use Victoria (Purchaser's solicitors are handling the water share transfer and discharge of mortgage as our client didn't wish to lodge a mortgage over the water shares).
Land Use Victoria turned our receptionist away saying the property component had to be on Pexa.
I personally went up to Land Use Victoria the following day and explained that: a) the existing mortgagee was not going to separately hand over a discharge for water shares without receiving repayment of their loan; and b) We can't be expected to hand over repayment of the loan to the mortgagee without receiving both the property discharge and the water share discharges.
The gentleman (very) reluctantly registered our paper documents after us both arguing our points for some time, but moving forward, how on earth are others handling such matters? The gentleman said he has never had this issue before, so what should we (or the Purchaser/Vendor's solicitors) have done differently?
In reality, I don't understand how a simultaneous Pexa and physical settlement can occur - particularly with the numerous delays that Pexa settlements have - are we (or our settlement agents) meant to wait around until the Pexa workspace is settling (for property aspect), and then collect the water share transfers/discharge of water share mortgages?
Can someone please shed some light? That was an exhausting 3 hours at the titles office.