Stressed about settlement dates? Start here.

Buying property? With the market booming, settlement dates have become a big topic of conversation between conveyancers and clients. Here’s what you need to know about choosing a conveyancer early and getting the settlement date right.

The last 12 months have seen an unprecedented spike in residential sales in the industry. Looking at housing data from the Australian Institute Health and Welfare (AIHW), it’s clear that property in South Australia is booming. The lending commitments to owner occupier households in SA (not including refinances) totalled $688,500,000 in February 2020. A year later, in March 2021, the lending commitments totalled $1,298,700,000. This boom has had major flow-on effects, in particular for the banking sector.

How the boom is affecting settlement dates and conveyancing discharge of mortgage processes

The massive jump in residential sales has created a huge backlog, particularly for the big banks, forcing them to extend their processing times when it comes to the mortgage discharge process. This is affecting settlement dates, and we’re regularly getting questions about what to do about settlements delayed by banks.

Previously, as conveyancers, we could lodge a discharge of mortgage form with an estimated turnaround time for settlement being a short two weeks (generally 10 business days). Now, the banks are working on typical settlement periods of 25–30 business days to turn around a full discharge of mortgage (partial discharge of mortgages for cross-collateralised loans are even lengthier).

That’s 5-6 weeks from receipt of the discharge paperwork – longer than the average settlement period in the past.

How the boom is affecting loan applications

Banks are also finding it hard to process new loan applications or loan documents in a timely manner. We don’t believe it will be this way forever, but for the foreseeable future at least, these lengthy times will be the new normal, which means house settlement periods are going to be impacted.

Our aim is to always settle on time. We work very hard as conveyancers to avoid delayed settlements, requesting addendums, or creating licences to occupy as they can be costly to you – our clients. Often, this is out of our control. But there are simple steps that you can take to help avoid these situations too:

Choosing a conveyancer early is key

Tips for vendors

If your property has just gone on the market, have a think about who your conveyancer is. As soon as you’ve accepted an offer, regardless of any special conditions, we recommend you touch base with us early. We’ll review the title and provide you with the correct discharge form for completion. Make sure you let us know if your mortgage is linked to another property; it’s important to fill out a discharge correctly for cross-collateralised loans to save time down the track.

Tips for purchasers

Make sure you speak to professionals to help guide you with appropriate settlement dates before you sign a contract. If you haven’t chosen your bank just yet, you’ll likely have a couple of lenders in mind. As conveyancers, we’re dealing with banks daily, and we can guide you on how they’re roughly tracking for turnaround times. Alternatively, if you’re going through a mortgage broker, get their advice – and then check it over with us. We’ll work with them to make sure you’re protected in the contract in case the settlement is delayed by the bank.

Not sure how to choose a conveyancer, or what they do? What happens if you don’t settle on time? How long does settlement take? Do you need to arrange a long settlement period? We can help answer all your questions. Get in touch with us today.

Other things to remember about settlement dates, delayed settlements and discharged mortgages

Discharge Authorities can sit with a bank for months, at no cost to the vendor. So any delays or terminated contracts due to a declined finance will only mean that we’re well-organised for the next contract.

You might not be paying your mortgage off anymore, but that doesn’t always mean it’s been discharged from your title. Sometimes your mortgage is in nil debt for years but still registered – which can surprise people! Remember to get your conveyancer to check your ‘freehold’ title too, just in case your mortgage from 20+ years ago has been hiding on there all this time.

Pre-approval is great, but it’s not formal finance approval. Unfortunately, it doesn’t speed up your application or help you jump the queue! Don’t put in shorter time lines for your settlement date because you’ve had pre-approval. You will still need to consider the same time frames as everyone else.

Confused about contract dates vs settlement dates? Johnston Withers Lawyers and Conveyancers understand how overwhelming buying or selling a home can be. If you are currently in the market and you’d like advice about settlement dates, delayed settlements and mortgage discharges, please contact us on (08) 8842 1132 or get in touch online.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.