Electronic property settlements through PEXA point to future obsolescence of all paper contracts
The final process in any property transaction is the settlement, when the contracts have been signed, all preparations have been made and the funds are paid to the seller so that the sale can be legally lodged.
Increasingly lawyers and conveyancers conducting property transactions are being encouraged to undertake settlements through PEXA.
Development and rollout of PEXA platform in Australian states
PEXA, which stands for Property Exchange Australia, is a platform first developed in 2010 in conjunction with the state governments of NSW, Victoria, WA and Queensland, as well as the major banks ANZ, CBA, NAB, Westpac and Macquarie Bank.
The early stage of PEXA developed the online lodgement of traditionally hard copy forms such as mortgage discharges and caveats. In 2015 PEXA rolled out its platform for completely online settlements to take place.
In November 2017 PEXA announced it had 5,000 practitioners signed up to the service. From July 2019 all property transactions in NSW, Queensland and Victoria will be required to take place online. This is already the case in Western Australia.
Traditional property settlements
In a traditional or physical settlement, representatives of the buyer’s and seller’s solicitors and any banks involved in the transaction physically meet at a designated time and place. This is where all the final paperwork and cheques are handed over, so that the property can then become the legal property of the buyer.
PEXA property settlement has advantages for all parties
PEXA acts as a platform for a settlement to take place completely online. This means that settlements can occur in an online space, without anyone having to attend or send any hard copy paperwork or cheques for the transaction. The documents are largely prepared online, and all money involved in the transaction, including money coming from a bank, is transferred at the designated settlement date and time. This all happens automatically and the ownership of the property is also transferred at the same time.
For the lawyer or conveyancer, PEXA allows both sides to prepare and lodge everything required, so that settlement can go through smoothly. It has built-in checking to ensure that correct details of the property and financials are entered. Both sides are then able to see that all the paperwork and funds are ready for settlement. The process then happens automatically at the designated time.
PEXA settlements provide certainty, predictability and convenience
For buyers and sellers of property, PEXA provides a level of certainty and predictability for settlements. It is also more convenient. As all preparations are made beforehand, a settlement can be scheduled to take place anytime.
The funds from the settlement can also be cleared immediately and paid into the seller’s account on the same day. This allows same day or simultaneous settlements, where someone may be selling and buying a property, to be a much smoother process. In future, as the technology improves, the ultimate benefit for the buyer and seller will be being able to fill out and sign all the documents required for a property transaction, anywhere and at any time.
All forms of legal documentation to move to electronic format in the future
From 1 July 2019 in NSW mortgages, transfers and discharges will be required to be lodged electronically and all certificates of title will have been transitioned to e-titles, allowing all remaining paper Certificates of Title to be cancelled.
As much of the documentation moves to an electronic form, it is likely that in the not-so-distant future, property transactions will be conducted purely electronically from start to finish.
New developments in software such as DocuSign now allow documents to be signed online. It is likely there will come a time where every form of paper contract will be obsolete, meaning that every manner of transaction can take place online, without the need for the parties to meet in person.
Many other areas of legal services are open to advancements through technology. For example, most courts now offer online filing of documents and court materials.
Many of these changes will make the process of providing legal services easier. However, if these changes are to be successful, then they must also improve the experience of the client and make it easier for people to access legal services while going about their day-to-day life.