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What does a settlement agent do? [Part 1 – We’re not your bank]

This is the first of a series of articles analysing the role of the settlement agent* and how that role relates to, and interacts with, other service-industry professionals.  In Part 1 we look at banks^.

Stating the (not so) obvious

You wouldn’t ask your beautician to do your dry cleaning, nor would you ask your accountant to decorate your home. By the same reasoning, your settlement agent is not responsible for managing your dealings with your bank.  Let’s look in more detail at how that works for sellers and buyers.

Property sellers

Your settlement agent will:

  • contact your bank and let them know you have sold the property;
  • receive a statement from the bank indicating the amount required to discharge the mortgage (and repay the monies secured by it), usually one or two days before Settlement.  This is known as the pay-out figure;
  • ask the bank to attend settlement and hand over a discharge of its mortgage, in exchange for the secured monies.

You must:

  • contact your bank, let them know you have sold the property and sign and return the bank’s discharge authority or request to release security;
  • give your bank written instructions to liaise with and provide information to your settlement agent.  This is often included in the discharge authority;
  • raise any queries regarding your loans with your bank as soon as possible before settlement.

Property buyers

Your settlement agent will:

  • send the bank a copy of the Transfer of Land document, to assist in preparation of mortgage documents;
  • ask the bank to attend settlement and hand over funds required to complete settlement, in exchange for the documents it needs to register its mortgage.

You must:

  • complete your new loan documents. Liaise with your bank or broker to ensure the documents are signed and witnessed in accordance with the bank’s requirements. It pays to get this right and do it promptly! A delay on your part could delay settlement and result in you paying a financial penalty for late settlement.

Fine print

*For simplicity, we’ve used the term settlement agent by which we mean a licensed settlement agent or a lawyer who provides real estate settlement services.  These people are also known, generally, as settlement representatives.

^Likewise, bank means any mortgage lender such as a bank, building society or credit union.

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