Let’s settle this online: A guide to electronic conveyancing

What exactly is electronic conveyancing (also known as e-conveyancing or eConveyancing) and how does it work?

As COVID-19 and social distancing measures impact day-to-day life, the ability to complete conveyancing electronically when property is exchanging hands has become more relevant. Many procedures from the home-buying process have shifted to online platforms – including some home loan applications and auctions.

In 2008, the Council of Australian Governments (COAG) began the process of creating a single, national electronic conveyancing solution to allow property settlement processes to be completed entirely online. Two years later, Property Exchange Australia (PEXA) was formed to bring together conveyancers and financial institutions on one digital platform to complete the process.

According to Hopgood Ganim Lawyers, the use of eConveyancing systems, such as PEXA, has grown rapidly over the last few years. In fact, it is mandatory in Victoria and New South Wales for most standard property transactions, with paper settlements increasingly a rarity.

A 2018 Deloitte Access Economics report, commissioned by PEXA, found that conveyancers will benefit considerably from the increased take-up of eConveyancing systems, with estimates the industry could make around $89 million per year from the 100% digitisation of the lodgement and settlement process by 2021-2022.

If you are buying or selling a property and want to keep things digital, you may be wondering how this system works, and what are some of the potential pros and cons.

What is electronic conveyancing?

Conveyancing is the process of transferring ownership of the legal title of a property (such as a house or land) from one person to another. Preparing, verifying and lodging a range of legal documents as well as preparing the property for settlement are important parts of the conveyancing process.

→Related article: What is conveyancing and how does it work?

Electronic conveyancing (eConveyancing) allows registered conveyancers, lawyers and financial institutions to use a digital platform to prepare, sign and lodge the legal documents needed for this transfer of ownership and to complete financial settlement, according to the Queensland Government.

This means that eConveyancing can replace the need for paper and other manual processes traditionally involved in conveyancing transactions.

What platforms are available for electronic conveyancing?

According to the Australian Registrars’ National Electronic Conveyancing Council (ARNECC), which regulates the national eConveyancing framework, the platforms used to provide eConveyancing services are called electronic lodgement network operators (ELNOs).

ELNOs are approved by the registrar in each state and territory to operate in that jurisdiction and are available to be used by conveyancers, lawyers and financial institutions.

eConveyancing platforms currently available, or planned to soon be available, include:

• Property Exchange Australia (PEXA)

Available for document lodgement and financial settlement in New South Wales, Victoria, Queensland, Western Australia and South Australia.

• Sympli Australia (Sympli)

Available for some document and financial settlement capabilities in New South Wales, Victoria, Queensland and South Australia, at the time of writing.

• Purcell Partners

In the process of gaining approvals from each state and territory registrar, at the time of writing.

How do platforms like PEXA work?

According to LegalVision – a commercial law firm specialising in conveyancing – a lawyer, conveyancer and bank representative can participate together in an electronic workspace on the PEXA platform, where legal documents can be:

1. Prepared
2. Signed by the parties involved
3. Lodged for registration with state land registry or title office

Once this is complete, LegalVision said the rest of the conveyancing process (e.g. the financial settlement of the property) can occur either through the platform (if this capability is available), or in person.

→Related article: What happens on settlement day?

How can buyers and sellers use electronic conveyancing platforms?

Buyers and sellers must use the service of a lawyer or licenced conveyancer who is registered with one of the ELNOs operating in their state or territory to access eConveyancing.

You can search online to find a licensed conveyancer or lawyer (who specialises in conveyancing) and then check to see if they are registered to use an ELNO. You may like to start your search for a conveyancer by visiting the Australian Institute of Conveyancers (AIC) in your state. The AIC is the peak body representing registered, licensed and practicing conveyancers in Australia (excluding Queensland and the ACT).

The laws in both Queensland and the ACT require you to engage a solicitor if you want to obtain professional conveyancing services. Queenslanders can contact the Queensland Law Society to find a qualified solicitor, and prospective homeowners or sellers in the ACT can search with the ACT Law Society.

Once you have found the right conveyancer, they will explain the eConveyancing process to you, including how much it will cost.

According to LegalVision, a buyer or seller will need to complete two steps so their chosen conveyancer or solicitor can access eConveyancing services on their behalf:

1. Provide authorisation

If you are a buyer or seller you will need to provide written authorisation to allow your conveyancer or solicitor to conveyance using an electronic platform, such as PEXA. This written authorisation may be able to be completed online with the use of a digital signature, and  will typically allow the conveyancer or lawyer to:

• Sign documents on your behalf
• Present documents for registration
• Authorise or complete financial settlement of the conveyance and anything else needed to complete the transaction

2. Verify your identity

When providing authorisation, you will also need to verify your identity with your conveyancer or lawyer. They may use an identity agent (e.g. ZipID, Australia Post, IDSecure) to carry out this verification of identity (VOI), or will complete it themselves. To carry out this verification under the VOI Standard, they need to:

• conduct a face-to-face interview with you
• view your identification documents

These face-to-face VOI requirements have recently been reviewed by ARNECC to help conveyancers, solicitors, and identity agents adapt to the social distancing regulations of COVID-19.

→Related article: Digital mortgage applications during COVID-19

What are some of the potential advantages of electronic conveyancing?

Conveyancing firms, eConveyancing platforms and some state governments have touted a range of benefits of using electronic conveyancing systems for both buyers and sellers. Some of these benefits may include:

• Reduced costs

The New South Wales Government said transferring funds through eConveyancing removes the cost of bank cheques for clients who are finalising the financial settlement of a property. Legal Vision said there are no costs for couriers or settlement agents in using these electronic platforms.

• Faster process

PEXA said sellers could use the PEXA Key app to track their settlement and securely transfer their bank account details to the conveyancer or lawyer. The sale proceeds are then processed digitally as cleared funds to the seller’s nominated account, removing the usual three-day wait for settlement funds to clear.

• Convenience

The client may not need to physically attend their lawyer’s or conveyancer’s office, as client authorisation through eConveyancing allows the conveyancer or lawyer to sign any required transaction documents on their behalf.

• Reduced risk of manual errors and delayed settlement

The New South Wales Government said that the use of eConveyancing can also help reduce the risk of manual errors and delayed settlement, which can occur when paperwork and postage is used.

Are there any concerns with the use of electronic conveyancing?

LegalVision said that because eConveyancing does occur in a virtual space, there may be some concerns about whether conducting an electronic settlement is as safe as a paper settlement.

These concerns were brought to light when former MasterChef contestant, Dani Venn, had $250,000 stolen when a hacker accessed her conveyancer’s email account, set up an additional user on the PEXA platform, and then redirected the settlement payment. Ms Venn was able to recover her money after her bank froze a portion of the funds, and the shortfall was repaid by PEXA.

After this incident, PEXA said it would develop additional alerts and processes to further enhance confidence in their system, including putting measures in place to better monitor changes to passwords, users and account numbers.

PEXA has also introduced the PEXA Residential Seller Guarantee (PRSG), which provides protection to sellers in the event of certain kinds of fraud. This covers the seller should, in the rare circumstance,  their funds are misdirected due to fraud committed by a third party, but not due to the seller’s conveyancer or lawyer putting in incorrect bank details into the platform. Other criteria also apply to be able to claim under the PRSG, and there are some exclusions.

PEXA said that if you think your funds have been paid into the wrong account, your conveyancer or lawyer will need to contact PEXA immediately.

Questions to ask before using electronic conveyancing

Before you authorise your conveyancer or solicitor to use an eConveyancing platform on your behalf, consider asking them a few questions about the process, such as:

• What do I need to do to assist with the online process, and how will you communicate with me during this time?
• What checks and balances are in place with the platform and your systems to help ensure my personal information and funds are kept secure?
• What will it cost, and when will I have to pay?
• How long will it take for financial settlement to occur using these digital systems?

For more information on the use of electronic conveyancing, you can contact your state or territory land or commerce office, or visit their relevant website:

• New South Wales
• Queensland
• South Australia
• Victoria
• Western Australia

Tasmania, the ACT and Northern Territory are yet to roll out the use of eConveyancing.

Cover image source: Mongta Studio (Shutterstock)