Electronic conveyancing or e-Conveyancing as it is usually known has already had a successful launch in the state of Victoria and is due to be rolled out across the whole of Australia next year. This will allow faster and more efficient conveyancing and buyers and sellers should benefit.
Property law and conveyancing in Australia has many similarities with that found in England. So why can’t a similar system be introduced in England, or indeed across the whole of the UK?
Electronic share transfers have been the norm for many years now, but property transfers don’t seem to have progressed far beyond the days of quill and parchment. They still largely depend on paper documents which have to be physically signed by buyers and sellers and then shuffled about in the post.
In fact the Land Registry for England and Wales was trying to develop an e-Conveyancing system for many years and legislation is in place to allow it. However the registry decided to abandon further work on this in 2011 for various reasons.
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e-Conveyancing would help prevent delays on completion
Delays often arise on the day of completion of sales and purchases because of delays in the banking system. Solicitors have to make complicated arrangements for transfer of money between different banks, and are also dependent upon mortgage lenders releasing funds in good time.
Although the land registry is introducing systems to allow documents to be lodged electronically this will only affect legal work once a purchase has been completed. It will not particularly benefit clients as it does not help remove any hold-ups on the day of completion.
Property sales will now be completed on-line in Australia
e-Conveyancing is designed to remove the manual processes and paperwork associated with the current transfer of property by allowing solicitors, land registries, banks and others to complete transactions online. Cost efficiencies will arise because the time spent preparing documents will be reduced and the technology should greatly reduce errors and failures in land transactions.
It will provide a much more integrated method than that which operates at present by allowing all parties to transactions to plug in to the system including the land registries, banks and other financial institutions.
Following an initiative from the federal government of Australia a separate company was set up to deliver a national electronic conveyancing solution. This company has now developed a system known as Property Exchange Australia (or PEXA for short) “a purpose built system that brings property exchange into the 21st century.”
Banks and mortgage lenders will be part of the system
Once the system is fully up and running conveyancers will be able to open an online workspace where the Registry documents and the financial statements are created. This information will be shared with all parties to the transaction, such as banks and mortgage lenders.
Once all parties have signed off the details and funds are made available, PEXA will securely transfer the funds to relevant parties at the allocated time for completion. This will include the redemption of a seller’s existing mortgage.
PEXA will then lodge the relevant transfer and mortgage documents automatically with the land registry and pay stamp duty and any other potential third party beneficiaries such as secondary lenders.
This should remove many of the inefficiencies of the current paper-based conveyancing system. There will be less reliance on the phone and the fax to complete the transaction and greater transparency for property buyers and sellers as the status of both sides of the transaction will be visible to the parties.
How secure will the system be?
Security has been a major consideration in setting up the system. While PEXA is bound by the same security standards currently expected of online banking, it will also go further to provide protection against flawed or even fraudulent transactions through its error-checking program. The identity of buyers and sellers will also be verified to help prevent fraud.
A digital signature certificate will be required to allow subscribers to conduct business securely using a web browser and a USB security token. Transactions will only be allowed to proceed after every participating Subscriber has digitally ‘signed’ their transaction documents. Legally this is the same as if an equivalent paper document had been signed.
If a bank cannot verify the information entered into the system the relevant party will be notified and asked to correct the error before completion can occur.
Because the state land registries are part of the system a buyer’s solicitor will automatically be made aware of any changes in the seller’s registered title which occur before a transaction is due to be completed. The solicitor can then put the transaction on hold until any problems have been sorted out.
e-Conveyancing would speed up house purchases in the UK
A similar system could undoubtedly lead to faster conveyancing in this country. It would not necessarily help speed up the pre-contract stage when buyers’ solicitors have to carry out necessary searches and enquiries. However it would greatly assist in ensuring prompt completion of transactions once contracts have been exchanged.
It would also help remove some of the hold-ups in the legal process which can occur on the day of completion and which often cause great difficulties to buyers. This especially likely to happen with a long chain of related sales and purchases when delays in bank money transfers sometimes lead to transactions being completed very late in the day – or even having to be postponed until a later day!
One of the reasons that the land registry for England & Wales decided to stop development of e-conveyancing was that some solicitors thought the process for creating and applying electronic signatures was too complicated. Why this should be so is not clear but if Australian conveyancers can cope with it why shouldn’t their British counterparts?
One feature of the Australian system is that it is designed to work across all of the states in that country despite that fact that each state has its own separate legal system and land registry. At present anyone wanting to sell a home in England or Wales and buy one in Scotland or vice versa will find arranging completion quite difficult because of differences in conveyancing practice between those countries. A unified e-conveyancing system along the Australian lines could help solve these difficulties.
Much of the impetus for developing the PEXA scheme has come from the Australian government as well as the banks and other financial institutions. With further development on e-Conveyancing apparently stalled in this country it looks as if nothing more will happen unless the stakeholders in the housing market including financial institutions, property developers as well as ordinary homeowners and buyers create political pressure for the UK government to take action.