In brief - E-conveyancing will remove the inefficiencies of the paper-based system
The national electronic conveyancing platform created through the Property Exchange Australia (PEXA) system will allow land registries, banks and conveyancers to transact together online and will create greater transparency for property buyers and sellers.
What is e-conveyancing?
Friends, clients, conveyancers, lend me your ears! For huge change is upon us, whether we wish it or not. The traditional conveyance is drawing ever closer to extinction and in its place dawns the electronic property transaction.
After the international success of e-conveyancing, there was great demand within the Australian property industry to move with the times and invest in the development of electronic conveyancing. To answer this call, the Australian government formed National Electronic Conveyancing Development Limited (NECDL). NECDL was established to deliver a national electronic conveyancing platform through its Property Exchange Australia (PEXA) system.
PEXA was designed to remove the manual processes and paperwork associated with the current transfer of property by allowing land registries, banks and conveyancers to transact together online.
When will PEXA be launched?
The first release in NSW is scheduled to happen shortly with two of the major banks. This release will encompass the settlement of single party property transactions (i.e. standalone discharge, standalone mortgage, refinances etc). This first release has already been successfully launched in Victoria.
The second release, originally planned for August 2014 in NSW, is now on course to happen in May 2014. The second release will facilitate the settlement of multiple party transactions (i.e. transfers, settlements, caveats and notices) and will involve conveyancers, land registries and more financial institutions.
How will settlements happen under e-conveyancing?
Following the second release, conveyancers will open an online workspace where the Registry documents and the settlement schedule are created and information is shared with all parties to the transaction. Once all the funds are made available, PEXA will securely transfer the funds at the allocated time for settlement.
Following a successful settlement, PEXA will then lodge the relevant documents automatically with the land registry and pay stamp duty and any other potential third party beneficiaries (councils, Sydney Water etc).
Is PEXA safe and secure?
While PEXA is bound by the same security standards currently expected of online banking, it will also go further to provide protection against flawed or even fraudulent transactions through its error-checking program.
If the applicable bank cannot verify the information entered into PEXA, a notification will be sent to the relevant party to correct the error before settlement may occur.
What are the benefits of e-conveyancing for property buyers and sellers?
Generally speaking, the inefficiencies of the current paper-based conveyance will be removed. There will be less reliance on the phone and the fax to complete the transaction and greater transparency for property buyers and sellers as the status of both sides of the transaction will be visible to the parties.
There will be greater efficiency and time saving, because travelling to settlements, arranging bank cheques and the physical execution of documents will no longer be required.
The institution of e-conveyancing will also be cheaper for the parties involved. The costs of paying a settlement agent to attend settlement, bank cheque fees, the costs of a courier to collect and deliver documents and the extra legal fees accrued in the time spent organising settlement will be abolished.
How will e-conveyancing affect property developers?
The use of PEXA will:
- Allow settlements in the sale of lots en masse to occur electronically at one specified time on one specified date
- Permit conveyancers to manage bulk settlement funds electronically
- Allow the direct transfer of sale proceeds into the developer’s nominated account
- Remove the requirement for the physical exchange of paperwork at settlement (including the certificate of title)
Thus, the settlement process will become much cheaper and more efficient for developers and conveyancers alike.
Is the use of PEXA mandatory?
While PEXA is not compulsory for conveyancers, the benefits that it will bring make it difficult to justify not using it. However, if one party to the transaction is not registered with PEXA, they can be invited to the transaction by the already registered party.
NECDL would then contact that party directly, perform the registration process and give them access to PEXA if they so elect. This process will be able to be completed within two days.
If the party not on PEXA declines the invitation, the transaction will then need to proceed through the current paper-based forum.
How can we prepare for e-conveyancing?
The best way to prepare for e-conveyancing is to stay informed. NECDL releases a monthly electronic newsletter through its website to which anyone can subscribe.
Electronic conveyancing is coming. The property industry and the banks want it to happen and in other states it is already happening. As online banking and online share trading have now become the norm, so too will electronic conveyancing.
In eight months' time, your conveyancer may well be finalising the sale or the purchase or the refinancing of your home, online, from their desk, with the mere click of a computer mouse. Food for immediate thought.
This article has been published by Colin Biggers & Paisley for information and education purposes only and is a general summary of the topic(s) presented. This article is not specific legal or financial advice. Please seek your own legal or financial advice for any questions you may have. All information contained in this article is subject to change. Colin Biggers & Paisley cannot be held responsible for any liability whatsoever, or for any loss howsoever arising from any reliance upon the contents of this article.