for the vendor, the purchaser and the real estate agent
What does a vendor need to know?
A vendor who wishes to participate in electronic conveyancing must be aware of the following:
- They will need to have their identity verified.
At the present time Australia Post is running a service verifying identity.
- It may be that your solicitor can verify your identity. This will require you to at least provide one form of photo identification and other supporting documentation. Without the identity verification you cannot participate in an electronic conveyancing transaction.
It is anticipated that going forward no paper Certificates of Title will be issued, and will instead be kept as electronic documents, and known as a control of the right to deal with the property. This means that if you do not have a certificate of title after discharging your mortgage, you will nonetheless be recorded as holding the right to control the dealing with your land.
Once you exchange the contract you will need to ensure that your solicitor is registered to undertake electronic conveyancing with Pexa Ltd and your bank or lender is aware an electronic conveyancing transaction takes place. If one of the solicitors or conveyancers is not registered, the matter cannot proceed electronically.
All steps associated with the usual sale process are completed by the solicitor. You will receive details of what the pay-out figure is and you will direct your solicitor as to how you would like your cheques drawn.
The cheques will in fact not be drawn, but will be deposited automatically into your nominated accounts or the persons you direct to be nominated. It is anticipated that all banks will be registered with Pexa Ltd, and because the electronic transactions take place between all parties, money should appear in the relevant account immediately.
The big question is whether this will save you money. Initially the cost to verify your identity with Australia Post will be $39. As yet the sponsoring entities and Pexa Ltd have not decided what their fee will be. As the date approaches we can offer a better analysis of what the costs of electronic conveyancing will be and whether this will likely represent a cost saving.
The other question a vendor must ask is whether the process is safe. The legislation aims to make the process safe. Privacy is protected under the verification of identity services. Monies are transferred automatically between accounts.
For all intents and purposes, the transaction is transparent. As a vendor you will not have access to the Pexa Ltd system but would be able to obtain progress updates from your solicitor as the transaction progresses. A mutually-agreed workspace will mean all parties can log in to track the progress of the transaction.
Benefits for Vendors
The great benefit for vendors include an awareness of the bank’s readiness to discharge the mortgage, and the amount required to pay out the mortgage.
On the whole, there will be greater transparency and involvement of the parties from a vendor perspective in the new electronic conveyancing system.
What does the purchaser need to know?
Contracts will still need to be signed by the purchaser, and the purchaser’s identity will need to be verified.
All banks and financial institutions are now parties to the Pexa Ltd system. This will effectively mean that the banks will be encouraging you to use electronic conveyancing and employ a solicitor who participates in the Pexa Ltd scheme.
It may be that your bank does not need you to sign the mortgage but merely needs you to agree electronically as to the terms of the mortgage. There will be an electronic signature included on the mortgage and any loan documentation.
The great benefit of this is that there will be an ability to download and review documents on a regular basis and for you to confirm that you have read and verified those documents.
You may not need to attend your solicitor’s office if you wish to go through the mortgage with him or her, as the process can be completed by mutually shared workspace. This will represent a time saving for all parties as well as a cost saving.
It is anticipated parties relying on electronic conveyancing will need to verify that the required funds are available in a prescribed account which can be deducted to affect settlement. This usually means the purchase funds will be paid to a nominated bank account with your mortgagee or to pay into your solicitors trust account. The benefit of having a solicitors trust account is that it is controlled by the relevant state Law Societies with consequential protection under the indemnity scheme provided by the Law Society and associated legislation.
If you intend to allow the bank to deduct money from your bank account, that account will need to be part of the material contained in the Pexa Ltd workspace.
The great benefit for purchasers is that they are able to see all transactions being
- The vendor has a nominated mortgagee available to discharge the mortgage.
- Your incoming mortgagee will indicate a date on which they can complete settlement and the funds available.
- There will be an account in which the balance of the funds of the purchase are deposited.
- The account containing the purchase funds will also contain additional funds to pay stamp duty, legal fees and out of pocket expenses.
These matters will be transparent an easily accessible to you or your solicitor.
For a purchaser participating in electronic conveyancing, there is a visible and transparent trail of transactions around the purchase, with the result that potential problems are identified sooner rather than later.
Purchasers Cost Savings
All purchasers will ask whether this will cost more than the present regime.
The cost of Pexa Ltd is as yet unknown. There will be a time saving and will possibly be a reduction in out-of-pocket expenses as there will be no need to physically attend settlements. Ultimately it is intended that a purchaser will be saving money as a result of not having to pay a clerk to attend settlement rooms.
The great benefit for a purchaser is the ability to note the transaction has taken place as agreed. The funds will be deducted from their bank and your will be available to move into the property on the settlement day. The uncertainty about settlement completion at a time and place will be significantly reduced.
What does the real estate agent need to know?
There will still be a physical exchange of contracts. There needs to be a new clause inserted in the contracts to say that the parties agree to participate in electronic conveyancing,
As yet the new clause has not been finalised, although it is anticipated it will be finalised before Pexa Ltd commences in October.
Where contracts are exchanged at auction, sometimes purchasers will not know the name of their solicitor of if the solicitor is registered for electronic conveyancing.
Agents will need to familiarise themselves with the process associated with electronic conveyancing. Other agents may need to, at open houses or when contracts are issued to the purchasers, ensure purchasers are aware the vendor wishes to participate in electronic conveyancing. The agents may give purchasers and opportunity to instruct a solicitor who is engaged in electronic conveyancing.
As electronic conveyancing is new in 2014, there are a number of areas that will not be clear until the system has been in operation for some time.