The future of property transactions is increasingly looking digital as more Australian states introduce paperless conveyancing. In an era where most transactions can now be done online, it makes sense that paperless conveyancing replace the traditional form of physical settlement.
What is Paperless Conveyancing?
Processing property transactions manually is costly and time consuming so the Australian government has set up a national electronic or ‘e-conveyancing’ system. This system, called PEXA – which stands for Property Exchange Australia Limited – allows all the legal and monetary processes of a house sale to be completed online.
Lawyers, conveyancers and financial institutions are able to submit all the necessary legal documentation and complete the funds transfer of a property settlement electronically, minimising the need for manual paperwork.
Most Australian states now allow for paperless conveyancing; in Queensland you can choose to handle your property transaction online or in the usual way. Some states are taking it futher: by 1 July 2019, all standard property transactions in New South Wales will be conducted electronically, and all paper Certificate of Titles will be phased out in favour of e-Titles.
Benefits of paperless conveyancing
- Home buyers will be able to lodge documents online 24/7, creating flexibility with time critical transactions.
- In most cases, settlement and lodgement will occur simultaneously instead of at the convenience of the bank, which can take days, weeks or months.
- Electronic funds transfers remove the cost of cheques and are more secure, removing the traditional three-day wait for funds to clear.
- Electronic conveyancing eliminates settlement fees and reduces the potential for fraud and other issues that arise around paper-based transaction. Sellers will receive printed and electronic receipts for all the monetary transfers that take place, and because everything is standardised and online in one workspace there is less chance of errors. This gives added peace of mind for vendors.
- There will be reduced labour and preparation costs. Overall transaction costs are reduced as solicitors and conveyancers no longer have to hire settlement agents, settlement venues, purchase bank cheques or pay courier fees. Traditionally these costs were passed on to clients, so the decrease in costs can save vendors between $150-$200 per property transaction.
- Selling your property can typically generate a mountain of paperwork but with e-conveyancing the need for an excessive amount of documentation is reduced and the process is simplified.
- Waiting for the sale of a house to be processed can be stressful but with paperless conveyancing, stress is reduced by receiving updates via text or email to keep you informed about your settlement. This saves vendors having to follow up with solicitors to find out about progress and if there are any problems that need addressing.
New South Wales Minister for Finance, Service and Property Victor Dominello said the government was committed to promoting innovation and ensuring that policies reflected the digital age.
“These reforms will save home buyers time and money by reducing settlement delays, removing reams of unnecessary paperwork and preventing fraud,” Mr Dominello said.
“The changes will also benefit business by providing certainty and clear transition timeframes for the implementation of digital conveyancing, and reducing costs associated with settlement.”
It’s not just the reduced errors and fewer settlement delays that property buyers, vendors and industry stakeholders are benefiting from – there are also significant time savings involved.
Audit firm KMPG facilitated sessions with lawyers across New South Wales, to ask for their experience with e-conveyancing. The process identified some great improvements, mainly around the time savings, with some reporting more than 4 hours of savings per client.
There’s also the huge benefit of not having to physically attend settlement. In regional areas, this is particularly important – for instance, in a region like Broken Hill, a settlement might have involved a 4-hour drive each way. Now, settlement can be achieved from the desk. Even in Sydney, you want to avoid driving across the city in peak hour if you can, and with paperless conveyancing you can attend settlement at your desk.
Some complex transactions won’t be covered by paperless conveyancing. In Queensland, the majority of residential land transactions can be processed through PEXA.
Transactions that cannot be processed through PEXA include:
- non-monetary (zero consideration) transactions
- transfers by direction
- stand-alone transfers (no contract)
- residential land with a non-residential land component
- transactions that include the sale of a business asset
- transactions aggregated with an ineligible transaction
- transactions to which an exemption or concession applies (excluding home, first home and first home vacant land concessions)
- transactions involving a reduction in duty (e.g. an option agreement offset).