VIC Bank doesn't want to participate in settlement

[forumnoob]

I had a mortgage that we finished paying several years ago. A couple of years ago, I instructed the bank to discharge the mortgage. They closed the home loan account and sent me a copy of the electronic title search which said the mortgage had been discharged. At that time I understood that the bank no longer held any interest in our property but what I didn't know was that the bank was still holding control of the eCT.

Fast forward a few years and right now we are selling that house. Both the purchaser and I have signed the contract of sale and the settlement is due in 1 month.

I contacted the bank and told them that I have signed the contract of sale and need to put the bank in touch with my conveyancing lawyer. But they told me that they are not going to participate in the sale hence they won't participate in the settlement. They told me to instead fill in a form instructing the bank to release the control of the eCT to the Registrar of Titles.

I asked them if I can provide them with my conveyancing lawyer's contact details so they can instead transfer the control of the eCT directly to my lawyer. But they said they will simply release the eCT and after that is done my lawyer can search for the title.

They even pre-filled the discharge form that they emailed to me and ticked "Release security only" instead of "Property will be sold". I don't have the option of modifying this.

Can they do this? What they are doing has the potential of delaying the settlement.

 

[Atticus]

Short answer: yes, they can do this, and no, it should not delay settlement if handled promptly. What the bank is doing is normal for Victoria’s electronic Certificate of Title (eCT) system.
Here’s what’s going on and why it’s not as bad as it sounds.

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What “control of the eCT” actually means​

In Victoria:

• Ownership is recorded on the Torrens Register, not by who “holds” the title.
• When your mortgage was discharged, the bank’s legal interest ended.
• However, under the electronic titles system, the bank often retains control of the eCT as “Control of the Right to Deal (CoRD)” until the owner asks for it to be released.

This is administrative control only, not a mortgage or security interest.

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Why the bank won’t participate in settlement​

Banks only participate in settlement if they have a live mortgage being discharged at settlement.
Because:

• Your loan is closed
• The mortgage was already discharged

…the bank has no role in the sale settlement and cannot be a party in PEXA or paper settlement.
That’s why they are refusing to deal with your conveyancer.

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Why they are ticking “Release security only”​

This wording is misleading but standard.
“Release security only” in this context means:

• Release control of the eCT
• Not “we still have security”

They are not saying the property isn’t being sold.
They are saying they are not involved in a sale transaction.
They cannot tick “Property will be sold” because that option is for live mortgages discharged at settlement, which this is not.

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Why they won’t transfer control directly to your lawyer​

Under Victorian Land Registry rules:

• Banks typically release eCT control back to the Registrar of Titles, not directly to practitioners.
• Once released, any authorised conveyancer or lawyer can lodge dealings against the title.

This is standard practice.

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Will this delay settlement?​

Only if it’s left too late.
Typical timeframes:

• Banks usually release eCT control within 3–10 business days
• Once released, your conveyancer can immediately:
  • Nominate themselves in PEXA
  • Proceed to settlement as normal

With 1 month until settlement, you are still safe if the form is submitted now.

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What you should do immediately​

1. Sign and return the bank’s release form ASAP
2. Ask the bank for written confirmation when control of the eCT is released
3. Forward that confirmation to your conveyancer
4. Your conveyancer will then:
   • Confirm the title status
   • Prepare settlement without the bank involved

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Bottom line​

• The bank is not acting improperly
• They no longer have any interest in your property
• This is a routine administrative release
• Settlement will not be delayed if you act now