Conveyancing in Australia is moving with the times, and that means moving online. Electronic conveyancing will be compulsory for most Victorian transactions from October 2018. But how does e-conveyancing differ from old fashioned paper conveyancing?
In order to explain, we first have to answer the question “what is conveyancing?” The legal jargon is foreign for many people until they purchase their first property. In simple terms, conveyancing involves the following 2 main events:
1. Popping the champagne
This is when a vendor and purchaser agree to the sale of a property by signing a contract. It can happen following private negotiation or auction, but either way, the purchaser pays a deposit and the parties then take selfies next to the “SOLD” sign. Congratulations!
What follows is a period of approximately 60 days during which both parties get ready to move by packing up their belongings and complaining that they have so much stuff. The vendor can use this time to buy a new house, and the buyer might need to sell their old one. The buyer will also arrange finance for the purchase.
In the background during this time, your lawyer will be doing all the legal leg work. That means forms, forms and more forms. But as we transition to electronic conveyancing, from 1 July 2017 your lawyer can sign the transfer form for you, and duties forms are now signed online!
2. Moving day
Finally, your life is sorted into boxes and onto the truck. You’re just waiting for your lawyer to say that “settlement” has happened. So what is settlement? Think of it like a hostage situation. The kidnapper won’t hand over the victim until the suitcase of cash is dropped. Similarly, the vendor won’t release the title to the property until the purchaser pays the remainder of the agreed price.
Settlement happens at a meeting between the parties’ representatives and their banks. There are no guns involved but if all the documents are in order then the vendor will get paid and the buyer can collect the keys. Traditionally, this meeting has been done in person but with electronic conveyancing, settlement happens online.
What are the advantages of electronic conveyancing?
As you can imagine, paper settlements are prone to human error. A cheque can be misspelt, or a form can be forgotten, or sometimes both the cheques and the forms get stuck in a lift on their way to the meeting! Electronic settlements are much more certain as your lawyer can see every step of the process online as it progresses in real time. If there’s likely to be an issue, there will usually be forewarning. Admittedly, there have been some teething issues with Pexa, Australia’s online conveyancing network. However, once the settlement is set in motion, it tends to go smoothly.
With e-settlements everything happens instantaneously. Unlike a paper settlement where the vendor gets paid by bank cheque, the funds are released electronically straight after settlement. No need to wait for the cheque to be banked. Yay you’re rich! This also helps buyers who are funding all or part of the purchase themselves, as there is no longer any need to obtain bank cheques and deliver them to the city.
In addition, the buyer is registered as owner on title immediately following e-settlement. Conversely, this may take weeks with a paper settlement depending on your lender’s backlog of registrations, during which time your ownership is at risk.
Aliza Taubman is the Principal Solicitor at Prime Property Lawyers
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