DISCHARGE OF MORTGAGE REGISTRATION FEE BUILD 127 AND BEYOND

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1 DISCHARGE OF MORTGAGE REGISTRATION FEE BUILD 127 AND BEYOND As you will be aware, for dealings that settle on and from the 1 st December 2017, the BUYER S BANK, or if there is no bank, the buyer s agent, will be responsible for arranging the payment of the registration fees for the discharge of any mortgages required in conjunction with the transfer of a property. SettsPlus now incorporates these registration fees into your seller s statements to show as a DEBIT to the seller and will credit the buyer s agent the necessary amount on their statement which will further translate to the buyer s statement. This will take effect in any NEW file you load from 1 st December FOR FILES YOU HAVE ALREADY LOADED AND WHICH SETTLE ON OR AFTER 1 ST DECEMBER 2017, YOU WILL NEED TO MANUALLY INSERT THE REGISTRATION FEES INTO THE MORTGAGE PAGE OF THE CONTRACT DETAILS AND RESET YOUR BALANCE SHEET TO ENSURE IT WILL PICK UP THE NEW REQUIREMENTS. To ensure this feature operates as required, it is IMPERATIVE that when loading your files, whether you are acting for the buyer OR the seller, if there is a Mortgage listed on the title search, you need to enter the details into SettsPlus. To show you what will occur when loading a new file from 1st December 2017, please read the following: When there is a Mortgage registered, enter the Bank code and registration number of the document into the Mortgage page of the Contract Details icon as shown below. This will automatically, insert the registration fee as appropriate. For any existing files, you will need to insert the registration fee as shown. Should there be more than 1 registered Mortgage, enter the additional mortgages as necessary. THIS MUST BE DONE WHERE APPROPRIATE WHEN LOADING ALL NEW FILES, NO MATTER WHO YOU ACT FOR. By doing this, this cost is inserted into seller s statement through the Tax Invoice as shown below:

2 Since this is an adjustment and not a payment to be made by the seller s agent at settlement, this entry DOES NOT APPEAR on the seller s agent s balance sheet. The next part of the process is that this information follows on to the Statement to the Buyer s Agent by CREDITTING the registration fee/s as shown below: To show what happens on the buyer s statements, the following are extracts of buyer s statement when there is a bank involved and in a CASH situation. Firstly, with a bank: and then with CASH. You will note the BANK statement shows the funds required with the credit for the registration fee as a separate line item while on the CASH statement, the amounts are amalgamated as you will need to provide the funds at settlement instead of the bank.

3 To show you the effects the new requirements on the buyer s agents balance sheet, the following screen shots will show what happens in the four settlement scenarios of settling a PEXA deal with a buyer s bank, a PEXA deal with CASH, a MANUAL settlement with a buyer s bank and a MANUAL settlement with CASH. PLEASE NOTE that all the screen shots have been taken from a file where we are acting for BOTH parties, Wiggins to Black. Firstly, a PEXA settlement with a buyer s bank: Note the registration fee does not appear on the balance sheet as it will be paid by the buyer s bank.

4 Next, we have a PEXA deal with CASH: Note the inclusion on the balance sheet of the Discharge Fee line item as you need to provide the funds in the absence of a bank.

5 Next, we have a MANUAL settlement with a buyer s bank: Because the buyer s bank is responsible for the payment of the discharge registration fee, it will not appear on your balance sheet.

6 Finally, we have a MANUAL settlement with CASH: As previously shown the line item for the discharge registration fee is included on this balance sheet as you will need to provide those funds at settlement. To reiterate, if the buyer has a bank at settlement, they are responsible for the payment of the discharge registration fee which gives rise to the inclusion of the credit on the buyer s statement as shown previously, reducing the amount you need to account for. Whereas, in a CASH purchase you need to get those funds into your trust account from the buyer and while the fee is credited to you from the seller s agent for settlement, thus changing the cheque split from previous requirements, the total amount the buyer needs to provide for the settlement does not change.

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