After contracts have been entered into (exchange of contracts), if you have a mortgage over the title, your conveyancer will engage the mortgagee to arrange a ‘discharge of mortgage’. They will be invited to the PEXA Workspace (the electronic settlement platform) and advise of any requirements they may have for settlement to take place.
If you haven’t already done so, where the sale of the property is over $750k, you will also be required to obtain a Foreign Capital Gains Withholding Clearance Certificate via the ATO. This Certificate notes that no withholding is required to be delt with as part of the sale proceeds. All sellers in Australia are required to obtain this certificate. Where you are a resident for tax purposes, the clearance certificate is usually issued within 28 days of application.
If you are unsure of your residency or tax status, we recommend engaging an Accountant who will help you navigate these requirements.
Approximately 1 week prior to settlement, your conveyancer will confirm a draft break-down of any payments that are required to come out of the sale proceeds (e.g. rates payments and loan payout) and an estimate of the net sale proceeds. Where there are any loans to payout as part of the sale proceeds, these amounts are normally finalised by your bank on the morning of settlement.
Note that the seller carries the insurable risk of the property up until the time of settlement (or the buyer taking possession of the property, whichever occurs first) and we therefore recommend adequate insurance is in place until settlement has occurred.
Where you have committed to provide vacant possession on settlement, you will be required to establish this prior to settlement taking place. You are entitled to remain in occupation of the property up until the time of settlement, however, practically this means that you’d need to have physically moved all your possessions out of the property before a settlement can occur.
