It is critical for real estate agents to refer buyers and sellers of property to a law firm registered to effect electronic property title transfers in QLD and NSW during COVID-19, writes NSW Licenced Conveyancer, Rachel Godden.
The exchange or use of original documents has been greatly reduced during COVID-19. Banks, financial companies and businesses generally are insisting customers use electronic or online means of payment and entering into agreements . This process greatly reduces or eliminates the risk of passing on the virus. It is equally important for real estate agents to ensure parties to sale contracts to do the same for property transactions.
Electronic conveyancing – the settlement of property title transfers (PEXA)
Here is a short explanation from the PEXA website:
Electronic conveyancing provides a quick, simple way to complete the exchange of property. PEXA (Property Exchange Australia) is Australia’s online property exchange network and helps lawyers, conveyancers and other professionals lodge transfer documents with Land Registries and complete financial settlements digitally.
The NSW Government implemented the mandatory use of electronic conveyancing for all mainstream property dealings from July 2019. Participation in QLD is optional and the uptake by legal firms has been sluggish in that state. Attwood Marshall Lawyers were one of the first legal firms to adopt the new technology and continue to be able to process all transactions using PEXA in both states. However, because PEXA is optional in QLD, it is necessary that both law firms acting for the parties are registered PEXA users.
This is not always the case and we are frustrated when we discover the lawyers acting on the other side are not PEXA registered. This means there is a ‘paper’ settlement involving the attendance of the banks and all parties to the contract including handing over bank cheques at settlement. These cheques must be banked and take 3 business days to clear from when they are deposited. Sometimes funds can take nearly a week to clear! With a PEXA settlement, there is no physical settlement to attend – it is all done digitally online and cleared settlement funds are deposited into the seller’s bank account on the date of settlement. There is no waiting for funds to clear and settlement is far more reliable. There are no postponements due to cheques being incorrect or documents not being available (or banks forgetting to show up to settlement!). It is seamless and controlled by the lawyers.
How QLD & NSW property transactions are affected by COVID-19
Closure of local bank and credit union branches will make the drawing of bank cheques more difficult. In addition, being located on the QLD-NSW border carries unique challenges. For example, property buyers or sellers who engage NSW licenced conveyancing firms to complete their QLD transactions are especially at risk.
NSW licenced conveyancing firms are not lawyers and are unable to settle property transfers electronically in QLD unless they engage a third-party agent. Licenced Conveyancers should not be acting in QLD TRANSACTIONS.
They are not licenced to do this and do not have indemnity insurance if something goes wrong (see our blog on the dangers of using cheap conveyancers). Lawyers can transact using PEXA in both states however in QLD, the majority of solicitors are still settling their matters on paper because the QLD Government has not mandated electronic settlement.
During movement restrictions or lockdowns these lawyers and banks may be unable to settle the transaction. We advise real estate agents, buyers and sellers, to check whether their solicitor can settle using electronic conveyancing to prevent delays or failing to settle which could result in termination of the contract and forfeiture of the deposit.
Real estate agents need to ensure that their clients are engaging lawyers who are registered PEXA users that can settle transactions electronically in both states. This eliminates any logistical issues caused by potential lockdowns or inability of the parties representatives and banks to physically attend a settlement.
For COVID-19, PEXA advised the industry that, as a precaution, it had invoked its Business Continuity Plan, confirming its ability to continue processing land transactions on behalf of its members, even in the instance its teams are required to work remotely for extended periods. For PEXA’s full announcement click here. This means it is business as usual for electronic conveyancing despite the uncertainty of the lockdowns and restrictions on commerce.