Discharge of Mortgage lodgement fee – national alignment | Help Centre

[Hannah_McDowell]

Frequently asked questions

This post is aimed at practitioners and financial institutions who transact in Western Australia and South Australia and will be affected by the 1 December 2017 change to the way the Discharge of Mortgage lodgement fee is paid.

1. Why is this change happening?

Over the past four years, conveyancing has digitally transformed. With five states now completing property transactions electronically, industry recognises the importance of national alignment to fully realise the efficiencies that a digital settlement network provides.  As a result, the next phase of national alignment will take place in Western Australia and South Australia with an alteration to the Discharge of Mortgage lodgment fee procedure.

2. What's happening?

Effective 1 December 2017, there’ll be an alteration to the Discharge of Mortgage lodgement fee procedure in Western Australia and South Australia.

3. What's changing?

In a PEXA settlement, the Incoming Mortgagee will provide the amount for this statutory fee, rather than the Mortgagee on Title or Proprietor on Title. Where there is no Incoming Mortgagee, the Incoming Proprietor will provide the amount.

It is still incumbent upon the seller to provide clear title. The seller must therefore allow a reduction on the balance of purchase monies. All states that complete property transactions online will then be aligned, reducing confusion and improving the digital settlement process for the entire network.

To maintain consistency across all scenarios, industry has decided to replicate this change for paper settlements.

All lenders who have an active presence in Western Australia and/or South Australia are working towards operationalising this change in readiness for the switch-over on 1 December 2017.

4. What do i need to know? 

• The buyer’s representative ensures that the seller’s representative has allowed for the Discharge of Mortgage Fee in the adjustments.
• The Lodgement Fee for the Discharge of Mortgage is paid from the pool of source funds (e.g. loan proceeds or purchaser’s equity).
• All parties can see the full loan breakdown and destination amounts for stamp duty and Lodgement Fees.
• The breakdown to client is supported by the Settlement Completion Record.
• This national solution removes the need for additional source line items and confusion when dealing with different banks.
• Financial Institutions and their representatives will need to review consumer contracts, processes and systems to ensure they can adequately support the change to existing settlement processes by 1 December 2017.

5. Does this change also affect paper settlements?

Yes. To maintain consistency across all scenarios, industry has decided to replicate this change for paper settlements.

6. SAMPLE STATEMENT OF ADJUSTMENTS

We have included sample Statement of Adjustments for WA and SA below. See PDF attachment to bottom or right of this post for further examples.

WA Statement of Adjustments

SA Statement of Adjustments

SA Settlement Statement

7. WA: Will the Joint Form of General Conditions (JFGC) be revised to reflect this change?

The Joint Form of General Conditions already confirms that the vendor is obligated to give clear title, which remains the case. The change is in process, not to contractual terms. The process now is to debit the amount from the vendor pre-settlement, rather than have the vendor pay at settlement. Questions regarding the Joint Form of General Conditions should be directed to REIWA and Law Society WA as owners of the document.

If you have any enquiries about this change please reply to this post or e-mail us at: Angella.Chick@pexa.com.au (WA) / Daniel.Roesler@pexa.com.au (SA).

[BGoodwin]

Hi,

I understand the change in who provides the WA/SA Discharge registration fee, and that this will be replicated in the paper world.

Currently the Transfer registration fee is provided by the Transferee rather than the Incoming Mortgagee (in a paper transaction at least and I note all WA eligible transactions will be settled in PEXA from 1/12/17 in any case).

1. Does anyone know if the "industry" has agreed that the Transfer registration fee should also be provided by the Incoming Mortgagee like in the eastern States? 
2. Also I know that NT, which follows current SA practice, is not on PEXA but is their industry practice being aligned as well?
3. Is there somewhere I can read what the "industry" is agreeing to, particularly in relation to paper settlements?

 Cheers, B)

[Ames]

Hi @BGoodwin, 

The transfer fee is the obligation of the purchaser, though commonly funded by the loan provider as part of loan proceeds.

If there is a purchaser contributing equity and a mortgagee contributing loan proceeds, then either way the lodgement fee on transfer is being met by the purchaser's money (existing cash at hand, or money borrowed for the transaction).

If a lender is providing full proceeds, then that will necessarily include the funds for the transfer lodgement fee as part of the loan.

I hope this helps.

Ames.

[BGoodwin]

Thanks Ames,

Yes, PEXA transactions are straightforward, and I know this is all about PEXA.

What I really want to know is what's happening in the paper world. I'll find out from somewhere.

Cheers and thanks for your response.

[DMc]

Has this changed been delayed, to match the WA PEXA mandate now expected in May 2018?

[Ames]

Hi @DMc

The short answer is no.

The requirement from an industry perspective was to have everyone cutover on the same date, to avoid confusion.

The date didn't need to be tied to any requirement to lodge electronically, and the shift in the date of the reequirement to lodge transfers electronically has not impacted the date for alignment in the fee process.

Ames.

[DMc]

Thanks for the clarification @Ames. 

[DMc]

With 1/12/17 being this coming Friday.  Have 2 outstanding queries;

1. Would you know how are us practitioners supposed to know if the discharge bank (mortgagee on title) is bringing more than one (1) Discharge of mortgage? Just because the title shows one (1) mortgage number, that does not mean the mortgagee on the title is only handing over only one(1) Discharge of Mortgage document, especially in paper settlement.

2. Have heard that some banks are already trialing this new process; so would you know which banks are already (pre 1 December 17) reducing their payout for this, or are they ALL still bringing their discharge rego fee to settlement?

@AngellaC

[MarcusLiley]

Hey Damien

That's a paper question - one I doubt PEXA can answer.

Think it will be up to the Seller's Agent to ascertain.

AICWA are about to issue eNewsletter with suggested procedure.

Will email you an advance copy for feedback.

[DMc]

@MarcusLiley Would you be so kind as to explain who exactly is driving this change in the paper tradition towards 'national alignment' if it's NOT to suit the new electronic settlement model of PEXA? 

My only notification about 'national alignment' came from PEXA, no other source, till a later confirmation from AICWA...