You might be celebrating when you make that last payment on your mortgage, but don’t forget to take the last step to cut ties with the bank for good.

What is the next step?

Many people are not aware that they have to register a Discharge of Mortgage after paying off their mortgage.

After paying off your mortgage you need to collect your Certificate of Title (title deeds) and a Discharge of Mortgage signed by the bank. The Discharge of Mortgage must then be registered at the Land Titles Office and you will be issued with a new Certificate of Title clear of any mortgage.

What happens if I don’t take that next step?

If you don’t register the Discharge of Mortgage you might discover later, for example when you are selling your house, that there is still a registered mortgage on your property. By that time the bank may not be able to find your title documents and it can cause delays.

What happens if I don’t take that next step and 10 to 20 years had passed?

Consider the case where a person has paid their mortgage off in the 1990’s and failed to take the next step, a situation which was recently encountered by HKH. The first problem that arose was that the financial institution was no longer in existence as it had been deregistered by ASIC.  A search was conducted which revealed that the financial institution was acquired by Esanda and then subsequently acquired by the ANZ.

ANZ was contacted and it took some months for them to locate the title. They also located a signed Discharge of Mortgage from the 1990’s signed by the original financial institution.

Problem solved! Well not quite.

The original Discharge of Mortgage was not signed correctly and could not be registered at the Land Titles Office. It could not be corrected as the original financial institution was no longer in existence.

There are two mechanisms that can be used to have the document signed. ASIC can sign the document pursuant to Section 601AF of the Corporations Act or an application can be made to the Supreme Court seeking an order that the Registrar of Titles register the discharge pursuant to section 103 of the Land Titles Act.

In this case ASIC signed the Discharge and our client received the new clear Certificate of Title but at a significantly greater cost than they should have been paid had they not delayed. It would have been even more expensive if an application to the Supreme Court was required.

Howes Kaye Halpin can assist you with all your quirky property law matters.