After Exchange – things that must be done
Summary of what we will learn in this webpage:
- If the vendor has a mortgage, we need to ask the bank for a discharge of mortgage
- It is a requirement to serve the Land Tax Section 47 Certificate, and why must we serve before a certain time
- We may need to apply for the “Foreign Resident Capital Gains Withholding Clearance Certificate”
- How to reply to Requisitions on Title
- If this is a paper settlement, how to fill in the Transfer form
1) If the property the vendor is selling has a mortgage (there is a mortgage if on the Title Seach document, there is a dealing entry about mortgage to a particular financial institution), obviously the vendor needs to inform the lender (be it Westpac, CBA, or NAB etc) and request for them to discharge his/her mortgage. This could be done by ringing the lender, or go online to fill in what is normally called a Release of Security form and email it off to them. Do this soon after exchange, because it can take lenders up to 3 weeks to discharge the mortgage and be ready for settlement.
2) Serve on the purchaser or the purchaser’s solicitor (by emailing) the Land Tax Section 47 Certificate ,at least 14 days prior to settlement, if this certificate is not already included in the full contract. Service of this document 14 days prior to completion is important because a purchaser does NOT have to settle earlier than 14 days after service!
3) If the sale price is more than $750,000, the vendor needs to apply for a Foreign resident capital gains withholding clearance certificate from the ATO. Don’t be misled by the word Foreign, it applies to Australian residents! Once this certificate is received from the ATO, the vendor needs to serve (by emailing) it to the purchaser or the purchaser’s solicitor.
4) Reply to requisitions, if the purchaser or the purchaser’s solicitor served on us the Requisitions on Title document we attached in our full contract. (Requisitions on Title are essentially questions a purchaser is entitled to ask the vendor relating to the sale of a property.) For each of the questions, the usual replies are
- Noted; or
- Vendor relies on contract; or
- As far as the vendor is aware, yes, but purchaser to rely on his own enquiries; or
- As far as the vendor is aware, no; purchaser to rely on his own enquiries
The below does NOT apply to electronic settlement. After 30 June 2019, all lawyers are required to use electronic settlement platforms like PEXA to settle property sale/purchase transactions.
Currently, PEXA only allows lawyers and conveyancers to register with them, and only lawyers and conveyancers can enter details of property sale/purchase transactions on its platform. So unless a vendor chooses to do a paper settlement, which the vendor can either do himself or engage a settlement agent (paper settlement is still an option for a vendor even after 30 June 2019, it is just not an option for lawyers), the vendor will most likely need to engage a lawyer to proceed with electronic settlement. In PEXA, the TRANSFER form we are going to talk about below will be created by the purchaser’s solicitor for the vendor’s solicitor to view and confirm online.
As a vendor, if this is a paper settlement, we expect to receive a physical copy of a TRANSFER form from the purchaser’s solicitor. The TRANSFER can arrive STAMPED or UNSTAMPED. STAMPED means the purchaser has paid the stamp duty to Revenue NSW, or has been exempted from paying stamp duty (because purchaser is a first home buyer buying a property for less than $650,000, say). Regardless of the circumstances of the purchaser(s), as vendor, we want to receive the TRANSFER, stamped or not.
Shown below is what the TRANSFER form sent by the purchaser’s solicitor would look like, in 2 halves, the top half and bottom half:
(Sidenote: the below TRANSFER form does NOT show the inked Stamp.)
Here, we are assuming the sale/purchase price of this house is $650,000, as shown in panel D.
Panels A, C, D, E and H would be pre-filled by the purchaser’s solicitor. As vendor, we just need to check that these information are correct.
Vendor needs only sign on the “Signature of transferor” section, and get a witness to sign and fill in the witness’s details. Then this form is ready for settlement – as in, it would need to be handed over to the purchaser’s solicitor on settlement day.