Electronic (or e)-conveyancing is the process for settling, stamping and lodging property transactions electronically.
In effect, the parties are no longer required to attend a settlement physically; they will just attend electronically! They no longer have to hand over cheques, and receive Certificates of Title. Payment is made electronically, and the electronic title is transferred with the press of a button.
The Property Exchange Australia (PEXA) e-conveyancing system commenced in February 2015 in Victoria.
PEXA is owned by government agencies and a number of financial institutions.
It will eventually enable its subscribers (lawyers, licenced conveyancers, regulated financiers and government authorities) to lodge data with the Titles Offices in each Australian state and territory electronically, replacing paper documents. Participants will need to sign a Participation Agreement to participate.
The four parties usually involved in a conveyancing transaction (the vendor, the vendor's financier, the purchaser and the purchaser's lender) will need to participate and be authorised to use the system before a transaction can be completed electronically.
The rules set out protocols for:
creating electronic documents
settling transactions in real time and for value
arranging payment of the stamp duty
lodging and registering documents at the Titles Office
notification to various authorities, including the municipal council, water authority and state land tax
Within the PEXA system there are three ways of providing source funding to effect an e-conveyancing transaction (inclusive of financial settlement):
subscriber financial institutions;
a solicitor’s trust account; or
a PEXA source account.
The Legal Services Commissioner has recently notified practitioners that:
It is important to note that the PEXA Source Account is not a trust account within the meaning of the Legal Profession Act 2004, and therefore the protection offered by the Fidelity Fund may not exist if a default occurs in the PEXA Source Account. It is also important to understand that the interest earned on PEXA Source Accounts funds will accrue to PEXA, and not the Public Purpose Fund.
As mentioned in previous blogs (25 Aug 2014; 1 Oct 2014; 6 Nov 2014; and 17 Dec 2014), new verification of identity requirements are being introduced progressively in each state. These requirements include production of appropriate forms of identification of potential borrowers, as a means of avoiding fraud.
As a concession to Luddites, it should be noted that the paper conveyancing system will continue to be available for the time being. It will continue to be used where the representative of one or other party is not a PEXA subscriber.
In other words, PEXA is not (yet) compulsory.
However, as the various banks are now pushing forward with it, this may change!
W G Stark
Hayden Starke Chambers