If you've dealt with land recently, including buying or selling your own home, you may be aware that land can now be transacted electronically in New South Wales, Victoria, South Australia, Queensland and Western Australia. Use of the electronic lodgement network is fast becoming mandatory for specific types of land instruments across Australia.
The only electronic lodgement network currently available in Australia is Property Exchange Australia Ltd (known as PEXA). Another competing lodgement network may be available in the future. To ensure security of the network, only legal advisers, like Clayton Utz, and conveyancers can use the network after meeting set compliance requirements.
The electronic lodgement network is enmeshed with the States' land registries' data networks. In our experience, this integration facilitates the real time registration of an encumbrance or a registered proprietor coming on to the title.
When you must start using PEXA for land instruments
Financial transactions which require the lodgement or removal of mortgages are already impacted by these changes and many of our client's mortgage transactions must be processed through the electronic lodgement network.
Caveats and transfers of land are closely following the changes to mortgage processing. These instruments are increasingly being processed and registered through the electronic lodgement network.
We have observed in the market a hybrid approach nationally to electronic transactions being completed and this is in part caused by the different mandatory use dates across the States. The timetable for mandatory use of the electronic lodgement network is shared below, with some jurisdictions aiming for all land instruments to be lodged electronically within the next 18 months.
New rules for using an electronic lodgement network (PEXA)
Our clients are experiencing a change in the traditional conveyancing process as new forms and documents need to be completed if your transaction uses the electronic lodgement network.
Behind the scenes are a myriad of rules, guidelines, instructions, bulletins and notices covering the use of the electronic lodgement network. While there is a level of national cohesion in the practice guidelines and the participation rules, each State has its own unique requirements on what can and cannot be processed electronically.
These jurisdictional differences include certain States' mortgage documents having character limits and we have observed that this has led to the Memorandum of Common Provisions becoming more widely used for commercial transactions. You will need to seek advice and take care to comply with the rules if your transaction is cross-jurisdictional.
Also, for a few States there are transitional lodgement arrangements in place for conveyancing transactions where paper documents have been signed and held in escrow by a party. This could include a situation where a discharge of mortgage has been provided and held pending the completion of a project or other transactional documents. After the end of the transitional period those paper documents may not be able to be lodged over the counter and will have to be processed electronically, which will require additional forms to be completed.
Changes to your Sale Contracts for electronic conveyancing
Transacting electronically alters each party's responsibilities for conveyancing tasks and the timing for effecting settlement. It is imperative to ensure that your Sale Contracts allow for lodgement and registration of the transfer transaction on the electronic lodgement network.
Several States' law societies have released standardised sale contract clauses for electronic conveyancing. Depending on the nature and timing of your transaction, amendments to the standard clause may be required.
Additional fees for transacting in PEXA
PEXA fees are payable per successful form lodged and the fees are in addition to the usual statutory lodgement fees charged by the States' land registries.
What you need to know for your upcoming electronic transactions
To support completion of an electronic transaction, you will be required to:
- arrange for Verification of Identity of your authorised signatories;
- complete a Client Authorisation Form; and
- complete any additional documentation that may be required depending on the scope of your transaction.
Verification of Identity is similar to a 100-points ID check. Verification of Identity includes a face-to-face in person interview with your legal adviser, as well as the presentation of your original and current identification documents for review. In our experience, the identity documents typically presented for review are an Australian passport and a drivers licence. In the case of a corporate entity, the meeting must be with the individuals that can legally bind the entity, for example, this will usually be the directors or appointed attorneys.
The Client Authorisation Form is a prescribed form that establishes what type of electronic transactions your legal adviser may complete on your behalf. The mandatory Form is in addition to your usual engagement letter with your adviser. The Form allows for three different types of alternative authorisations to be granted to your adviser and these are known as specific, standing or batch. A specific Form is for one-off transaction use and should name the transaction for which it is granted. A standing Form is an authorisation to your legal adviser to conduct nominated types of transactions until the authority is revoked and a date of revocation may be specified. A batch Form is for a group of related transactions and this could be used for a development or a subdivision project, if a standing Form is not preferred.
The momentous shift to a national electronic lodgement network is underway and several States have signalled that they may require all land instruments to be lodged electronically by mid to late 2019. Now is the time to check and review your upcoming transactions to ensure they are ready for electronic lodgement.