Electronic Conveyancing “E-Conveyancing” – what will it change?
The current expectation is that the introduction of E-Conveyancing will occur sometime in July 2016. This introduction will bring about changes in the conveyancing and settlement process, enabling them to be conducted on a digital platform. The hope is that these changes will result in the opportunity for increased efficiency in the entire process and open up innovation in service delivery as conveyancing is integrated with other sectors that have embraced digital transformation.
In summary, once E-Conveyancing is operational, in addition to the recent reforms that have already been introduced (Reform #1: VOI which requires the identity of each party to a land dealing be verified and Reform #2: Priority Notices) the pending reforms will also come into effect (summarised below):
Pending Reform# 3: VOA – A requirement to verify a party’s authority or right to deal with the land or interest in the land
Pending Reform #4: CA – A requirement for conveyancers and legal practitioners acting for clients to have a signed Client Authority in addition to any other retainer agreements or authorities to act
Pending Reform #5: Duplicate certificate of titles will be abolished.
[For further information on the recent reforms follow the link here, and for the pending reforms follow the link here]
It is important to understand that the introduction of E-Conveyancing will not replace the current paper lodgement system but will run alongside it and ultimately increase the efficiency of the entire process.
Currently any member of the public, all legal practitioners, conveyancers and financiers can access the paper lodgement system through the Lands Titles Office. The E-Conveyancing system (Electronic Lodgement Network ‘ELN’) presently has only one E-Conveyancing provider (called PEXA – Property Exchange Australia) but it is likely that there will be more providers in time.
Only Subscribers can access PEXA and under the ARNECC Model participation Rules, Subscribers are limited to:
- Approved Deposit Taking Institutions (“ADI”)
- Australian Legal practitioners (or Law practices)
- Licenced Conveyancers
- the Crown in right of the Commonwealth, a State or Territory
- Public Servants acting on behalf of the Crown
- Holders of Australian Credit Licences
The reforms to the current paper lodgement environment have been introduced to enable the two environments to exist harmoniously side by side necessitating both the format of the documents used and the protocols and procedures in both environments to be aligned so that they are the same and operational in either environment.
The alignment of the format of the documents for both environments will mean that the registered owner, attorney, mortgagor and purchaser will no longer sign the documents required for the dealing of the land. Instead the Legal Practitioner, Conveyancer, Financier etc. will sign the documents (under the Client Authority) on behalf of the party to the dealing that they are acting for and authorised by.
To help explain this a bit more, we will use a familiar land dealing as an example – such as a property settlement:
For property settlements occurring in the paper lodgement environment, a few things will change.
If the Vendor (seller) has a mortgage over the property to an ADI (a Bank for example), then under the new reforms the Bank will not be required to produce the duplicate certificate for lodgement at the LTO. The Memorandum of Transfer will not be signed by the Vendor and the Purchaser but by either the Licensed Conveyancer or the Australian Legal Practitioner authorised to do so by evidence of their respective signed Client Authorities. If the Purchaser has a Bank providing a mortgage in respect of the purchase then the Bank may sign the Memorandum of Mortgage instead of the Mortgagor (Purchaser). The Bank’s the Conveyancer and Legal Practitioner will still exchange documents and cheques and lodge the registry instruments at the LTO. Then once all the dealings associated with the settlement are lodged with the LTO a Certificate of Registration will be issued instead of a duplicate CT.
In the lead up to settlement there will have been some additional searches of the original title held with the Land Registry and all parties to the transaction will have had to have their right to deal with the land verified and signed by Client Authorities. But, the process of settlement will not change significantly.
Settlements occurring in the electronic lodgement environment will be the most different.
For an electronic conveyance to occur each party to the transaction has to be represented by a Subscriber to an Electronic Lodgement Network (ELN) provider such as PEXA. Within the ELN provider, a secure online workspace is set up where the registry documents and settlement schedule are created and all relevant information is shared between the Subscribers (also referred to as participants) to the settlement. The shared workspace within the ELN provider promotes greater communication and transparency around what stage the settlement is at, thereby providing greater opportunity to anticipate and resolve potential problems and delays ahead of settlement. In addition, as many of the required fields in the Registry documents are pre-populated from data sourced directly from the Land Registry there is greater accuracy and reduced risk of errors. Much of the data is also shared, meaning that once it has been in-putted by one Subscriber to the workspace it can be confirmed and then used to automatically populate fields in all the relevant documents thus saving time.
Settlement times can be booked online with the Bank enabling pay out figures to be confirmed in advance. On the day of the Settlement, once preparation is complete and all the parties have indicated they are ready, the transaction is locked so that the automated system can check everything is in order prior to it all being processed at the appointed time. Once the Settlement time is reached, all registry documents are lodged with the land registry, the settlement funds are exchanged, stamp duty is paid along with any other listed fees and disbursements. No one has to leave their desk. This all happens online in an automated process.
Please note that there are fees associated with using the E-Conveyancing environment.
Where are we at now?
It is anticipated that there will be a four month transition period from the operative date of the pending reforms during which time registry instruments may be lodged in the pre-reform format with pre-reform witnessing, execution and certification. Land transactions that may be held up or require lodging of registry instruments after the four month transition period will be required to be lodged in the new format (although the Registrar-General has discretion in extraordinary circumstances.
Although there is new information and it will take time to adapt, the above changes will not only increase transactional efficiency but also provide the opportunity for innovation in the delivery of conveyancing services. The E-conveyancing system will bring the long established conveyancing practices and processes up to speed with digital transformation occurring in other sectors. Tri-meridian is looking forward to ensuring that its clients are equipped to embrace all of the opportunities that the reforms present.
For further information, please contact the author.
This article is posted in Adelaide, South Australia by Tri-meridian Corporate & Commercial Law and is intended to be used as a guide only. It is not, and is not intended to be, advice on any specific matter. We do not accept responsibility for any acts or omissions resulting from reliance upon the content of this article. Before acting on the basis of any material in this article, we recommend that you consult your professional adviser.