What is Electronic Conveyancing?
|What is electronic conveyancing?|
|Key concepts of electronic conveyancing|
|Key terms used in electronic conveyancing|
|PEXA – Property Exchange Australia|
|Benefits of electronic conveyancing|
|Some useful links|
|Articles on electronic conveyancing|
What is electronic conveyancing?
The term “electronic conveyancing” refers to a conveyancing transaction settledelectronically through the platform provided by Property Exchange Australia Limited (PEXA). The representatives of the parties and their financiers participate in an electronic workspace, where:
- registry instruments are prepared and electronically signed (transfer, mortgage, discharge/release of mortgage);
- duty may be paid as a settlement disbursement;
- the balance of the purchase money and its disbursement are agreed;
- the documents to be lodged for registration are checked pre-settlement at the Land Titles Office(LTO);
- at the agreed settlement date and time, provided the documents are in order for registration, the balance of purchase money is paid and proceeds of settlement are disbursed; and
- the relevant registry instruments are electronically lodged for registration (which usually follows that same day).
Electronic conveyancing does not cover the whole of the conveyancing transaction; just the preparation for and execution of settlement and registration. In relation to the settlement itself, the platform is essentially a virtual settlement room.
Key concepts of electronic conveyancing
For a practitioner to conduct the client’s conveyance using the electronic platform, the client must first provide written authorisation in the form of a Client Authorisation, a prescribed form in Schedule 4 of the MPR.
Through the Client Authorisation, the client expressly authorises the signing of documents on its behalf, the lodgement of documents such as transfers for registration, the financial settlement of the conveyance and anything else necessary to complete the transaction.
Verification of Identity (VOI)
In conjunction with the Client Authorisation, taking reasonable steps to identify the client is a keystone of electronic conveyancing.
The verification may be undertaken by the practitioner or may be provided by a Subscriber Agent. There are a number of commercial providers of verification of identity services.
Lawyers Conveyancing has its own VOI form, which clients can conveniently download from the following link: Lawyers Conveyancing Land Title Identity Verification Form.
(See also Australia Post – Land title transactions)
Documents such as the transfer and the financial settlement statement are digitally signed in the electronic workspace using a digital certificate.
Electronic certificate of title
As it is not possible to provide a paper certificate of title in an electronic workspace for settlement, a new approach is required. Paper titles will be phased out over time, replaced with virtual digital titles.
Key terms used in electronic conveyancing
Electronic Conveyancing contains a number of newly created terms and acronyms. Some of the most important ones are:
- ARNECC– Australian Registrars’ National Electronic Conveyancing Council: A body comprised of the Registrars from all Australian States and Territories.
- ELNO– electronic lodgement network operator: Is the party operating the electronic platform. The first ELNO is PEXA.
- MOR– Model Operating Requirements: The rules governing the relationship between the ELNO and the land title registries.
- MPR– Model Participation Rules: The rules governing the relationship between the electronic lodgement network operator (ELNO) and participants in the system such as lawyers.
- PEXA– Property Exchange Australia Limited: The company providing the electronic platform and the electronic platform system itself.
- Subscriber: A person or entity authorised to conduct electronic conveyancing transactions using the ELNO on behalf of a client, such as solicitors or conveyancers, or on their own behalf, such as financial institutions and government agencies.
PEXA – Property Exchange Australia
PEXA is both the company providing the electronic platform and the electronic platform system itself.
PEXA, the company, is limited by shares and its key shareholders are the Victorian, New South Wales, Queensland and Western Australian Governments, as well as the ANZ Bank, Commonwealth Bank, National Australia Bank, Westpac, and Macquarie Capital, together with the Link Group and the Little Group.
Additional useful information can be found here: Why Settle Online – The Advantages of E-Conveyancing
Benefits of electronic conveyancing
- Greater assurance and protection for parties that dealings will be registered almost immediately after settlement, avoiding the risk inherent in delays
- Reduction of risk associated with using cheques for settlement
- Reduction in time and cost spent chasing mortgagees (both discharging and incoming) and other parties, with the increased transparency of parties? readiness to settle through the PEXA workspace
- Elimination of the time and cost involved in instructing staff or agents and their attendance at physical settlements and lodgement at land registries
- Multiple updates as to any activity on the title post exchange
- Less reliance on payout figures provided on the morning of settlement with the workspace facilitating an agreed range for the payout figure
- Access to pre-settlement lodgement checks, reducing post-settlement requisitions from the Land Titles Office
- Immediate distribution of the proceeds of sale post-settlement.
Once the electronic conveyancing network has been established nationally, the inefficiencies of the current paper-based conveyancing will be removed.
The cost benefits are also detailed in the second reading speech by the Minister for Environment and Climate Change. In this speech it states that:
?an independent study estimated that if electronic conveyancing was implemented across Australia, the total savings would be approximately $220 million annually. As Victorian property transactions represent about 27 per cent of transaction anticipated to be conveyed electronically, the annual benefits to banks, solicitors, conveyancers, purchasers, vendors and the State of Victoria are expected to be in the order of $60 million to $70 million.
It is estimated that national electronic conveyancing will offer an average saving of $380 for a typical four party property transfer settlement, with these savings comprising $60 for each party?s bank, plus $130 saving for each vendor and purchaser representative per settlement, broken down as follows:
- $42 for paying a settlement agent to attend settlement
- $18 for removal of need for extra bank cheques
- $14 for a courier to collect and deliver documentation
- $56 in time spent having to organise settlement.
In addition to the cost benefits, additional benefits include:
- As all matters regarding settlement will be dealt with electronically, there will be less reliance on the phone or the fax to complete the transaction. Since arranging settlement and seeking payout figures can be facilitated through PEXA, law clerks will no longer spend time on hold booking settlement.
- Greater transparency is available as you will be able to see the status of all documents in the transaction, including the other party?s financial institutions.
- Greater efficiency and time saving as travel time to settlements, arranging bank cheques and arranging execution of transfer documents is no longer required. Client authorities can also be provided for a certain period of time or as a batch authority for a particular development minimising the amount of client authorisations required and therefore documents for the client to execute.
- Reduced failure rate as PEXA will carry out dummy lodgements through the electronic settlement process to ensure there are no errors in relation to any part of the process, i.e. any issues with the transfer.
- As settlements will occur electronically, there is no limit to the number of settlement which can take place ? the physical restraints of settlement are no longer applicable.
Some useful links
Articles on electronic conveyancing
Property: E-conveyancing: what you need to know
Property: Introducing e-settlement
Who are you? Prove it
E-conveyancing ? what does it mean for your business?
Farewell to paper: Electronic conveyancing to go national