PEXA Settlement FAQ
PEXA (Property Exchange Australia) is Australia’s online property exchange network. PEXA has been established specifically to assist lawyers, conveyancers, banks and other professionals lodge transfer documents with Land Registries and complete financial settlements digitally.
What is PEXA?
PEXA’s description of itself
Here’s how PEXA describes itself on its own website:
“PEXA (Property Exchange Australia) is Australia’s online property exchange network. It assists members – such as lawyers, conveyancers and financial institutions – to lodge documents with Land Registries and complete financial settlements electronically.
PEXA was formed in 2010 to fulfil the Council of Australian Governments’ (COAG) initiative to deliver a single, national e-Conveyancing solution to the Australian property industry. It was originally known as National e-Conveyancing Development Limited.
PEXA is committed to supporting the property industry as it transitions towards a 100% digital conveyancing process that’s fast, safe and efficient.”
In other words, PEXA is the new way conveyancing transactions are completed in Australia. Documents are created digitally, eliminating the clumsy and insecure paper documents of the past, and all communications between the parties (i.e. lawyers, conveyancers and banks) are conducted through the PEXA workspace.
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What is a PEXA workspace?
A Workspace is a shared area in PEXA where Subscribers prepare property instruments and settlement documents for a property exchange transaction to effect lodgement and or settlement. A new Workspace is created for each new property exchange and multiple land titles can be added to the one Workspace. Multiple titles may include an Apartment with a separate car space title.
The workspace is the place where the conveyancing settlement takes place. Each party to the transaction will enter details relevant to their role in the matter (i.e. details of the property, title, funds to be paid by the purchaser, funds being provided by the mortgagee, funds payable to the State Revenue Office as stamp duty etc.) and the various steps in the settlement workflow are completed, all the way up to the moment of final settlement.
It is through the workspace that the parties are able to see that settlement has taken place and documents and funds have been exchanged.
Each workspace also has a ‘conversations’ facility through which the representatives of the purchaser, vendor, incoming mortgagee, outgoing mortgagee and other participants in the conveyancing transaction can communicate with each other. For example, if the incoming mortgagee discovers that the borrower has no provided an important document and settlement may be delayed all parties can be informed of this via a ‘conversation’ entered into the workspace. The workspace is also the place that settlement times and dates can be changed if necessary.
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Who can use PEXA?
Only authorised subscribers can use PEXA and view the content of a workspace. Subscribers are legal practitioners, licensed conveyancers, mortgagees and others with a formal role to play in the conveyancing transaction.
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How is a PEXA settlement initiated?
A PEXA settlement is usually initiated by a purchaser’s legal representative, but it can also be initiated by a vendor’s representative. Other parties to the transaction are then ‘invited’ into the workspace by other parties who already have access to the workspace.
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How is money handled in PEXA?
Money is transmitted through the PEXA workspace by the party with access to the required funds. Funds may be transferred by a bank from a borrower’s loan account, by a law firm or conveyancing business through their Trust Account, or if a law firm or conveyancing business does not operate a Trust Account the funds may be held in the PEXA Source Account pending or post settlement.
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How are mortgage brokers and loan managers affected by PEXA?
Mortgage brokers
Mortgage brokers first appeared in the early 1990’s and their role was to source loans from various lenders and present loan options to real estate purchasers. Over time their role become more complex, as banks and non-bank lenders came to rely upon mortgage brokers to collect, collate and deliver various documents as part of the loan approval process. In effect, mortgage brokers took over the role of the bank manager, and became what is commonly known as the loan manager.
Eventually the banks had little communication with the borrower’s lawyer, and came to rely on the loan manager to communicate with the borrower, the lawyer and the bank. The loan manager would contact the conveyancing lawyer and request copies of documents, such as the Transfer of Land, Goods Statutory Declaration, Purchaser Statement, Notice of Acquisition and a variety of other forms that the conveyancing lawyer would prepare. This process tended to generate additional costs for a borrower, particularly if documents went missing and a fresh set had to be sought from the conveyancing lawyer.
PEXA has now streamlined the loan and settlement process for the loan manager by putting the bank in direct contact with the lawyer through the “PEXA Workspace”. There is no longer any need for the mortgage broker to obtain copies of documents from the conveyancing lawyer, as communication with all parties to the conveyancing transaction now takes place through PEXA.
Once the loan manager has collected initial loan application documentation from the borrower (i.e. a copy of the Contract of Sale, payslips, tax returns etc.), the rest of the lending process is handled by the lender’s PEXA team.
The lender’s PEXA team
Every lender now has a dedicated PEXA team, whose role it is to accept the PEXA workspace invitation, examine the digital documents created by the PEXA system, determine the amount of funds available for settlement, and to distribute the funds according to the borrower’s instructions. Any documents or information the lender may require is sought through the lender’s PEXA team, who communicate with other parties in the PEXA workspace by way of the PEXA workspace “conversations” facility.
Safe delivery of private/sensitive information
Before PEXA documents were routinely sent to unknown staff members in banks, broking firms and others involved in the conveyancing transaction by email, fax or post. Even the most sensitive of documents were dealt with in this way. It was quite common for documents to simply “go missing” without any taking responsibility for their security. In recent times, hacking, diversion of bank account details, identity theft and a host of related cyber-crimes have caused huge loss to business and individuals.
Electronic conveyancing, and particularly the development of PEXA, has been one of the main forces of change in the real estate and conveyancing industry. New requirements for Verification of Identity (VOI), signed Client Authorisations, and the move to digital documentation accessible only by authorised persons using digital signatures has greatly improved security for conveyancing consumers.
Our office no longer delivers documents to third parties, and any documents required by clients are stored in a Secure Document Exchange, set up in our electronic matter system for each client. Access to the SDX portal is by way of logging in with a username and password. The client can download documents anytime, 24/7.
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How much does it cost to use PEXA?
PEXA charges consumers a fee per transaction, and this is collected at settlement. The fees are subject to change and can be found by clicking on the following link: PEXA Fees
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