After a long transition period, the ACT has finally implemented PEXA as an optional settlement method for certain conveyancing transactions. If you are involved in a purchase or sale of property in Canberra, you will probably be settling through PEXA. So just what is PEXA?
When does PEXA come into the conveyancing process?
PEXA comes in after contracts have been signed and provides a digital workspace where the parties can conduct settlement. This replaces the old system, where the parties (or their representatives) and their banks would all need to meet in person at a physical location and exchange bank cheques and documents of title.
Digital Settlements – Why PEXA over paper?
A digital settlement brings a number of significant benefits to the parties:
- The representatives for the parties can track the matter in real time. In particular, each party can see where the other parties are up to, and whether there is anything waiting to be done before the matter is able to settle.
- Previously, bank cheques might need to be cancelled and re-issued if there were any changes (or errors). Now, each party can change payment directions immediately and on the spot.
- If settlement doesn’t proceed at the booked time because something isn’t complete or there is an error, the parties are notified and given the opportunity to fix the issue. If it is fixed, settlement occurs half an hour later. This greatly reduces the risk of settlement failing.
- A significant reduction in registration times – particularly for standard sales and purchases.
- The requirement to hand over any physical documents at settlement is gone – meaning there is no risk of settlement being delayed due to missing or destroyed documents (such as lost certificates of title).
Is it secure?
In preparation for the implementation of e-conveyancing, all physical certificates of title have been cancelled and are no longer required to deal with land. Many people are understandably concerned about the security of a wholly digital register. However, there are strict security measures which operate to guard against fraud.
Strict regulations mean that only certain people (called ‘subscribers’) have access to the e-conveyancing system – including banks, lawyers, and licenced conveyancers. Each person with access is thoroughly vetted, and subject to regular compliance checks to ensure that they remain eligible to participate in the system (including that they have adequate insurance if something does go wrong). To conduct a land transfer through PEXA, a subscriber will need to input multiple passwords or security codes at different points, as well as have a physical digital key in their possession at the time they sign off on the transfer.
All subscribers are also required to adhere to Verification of Identity (VOI) requirements for their clients in order to mitigate the risk of fraud, and must hold a signed authority from their clients permitting them to conduct the transaction.
Will PEXA be the new norm?
PEXA has been used widely in Victoria, New South Wales, Western Australia, South Australia, and Queensland. It boasts almost 9,000 practitioner firms on its registry, as well as over 150 financial institutions.
It is inevitable that ACT will follow the same path, and that e-conveyancing will become the default means of dealing with Land in the ACT.
Are you looking to buy or sell property in either NSW or the ACT? You can reach our Conveyancing Team by calling us on 6206 1300, or by completing the enquiry form on this page.
