Electronic conveyancing has been in effect in a number of east-coast jurisdictions for some time. From 1 August 2016, Western Australia commences its transition into electronic dealings with land. This edition of Finance News serves as a reminder to the upcoming changes – especially for ADIs.

Background

In April this year, Landgate circulated a letter to various industry bodies and key stakeholders seeking their feedback on proposed changes to the lodgement process for mortgages and discharges.

Following the consultation period for that proposal, Landgate published a bulletin which reiterated that it is “aligned with other Australian jurisdictions in supporting the accelerated take-up of electronic conveyancing because it provides a more secure and robust environment for all transactions”.

New changes applying from 1 August 2016

In implementing those proposals, with effect from 1 August 2016, Landgate’s Registrar of Titles requirements will be changed so as to require all authorised deposit-taking institutions (ADIs) to lodge:

  • all stand-alone discharges of mortgage and
  • all stand-alone residential mortgages,

signed on or after 1 August 2016, through an electronic lodgement network, such as the Property Exchange Australia (PEXA).

A residential mortgage is defined to mean a mortgage to which the National Credit Code applies.

Landgate defines a stand-alone mortgage to mean ‘any mortgage that is not lodged with a transfer of land, mortgage or any other document for the same Certificate of Title’.

Similarly, a discharge of mortgage is defined to mean ‘any discharge of mortgage that is not lodged with a transfer of land, mortgage or any other document for the same Certificate of Title’.

An interesting point to note for ADI clients is that whereas the changes from 1 August apply to stand-alone mortgages that are subject to the National Credit Code – and therefore primarily of relevance to retail banking teams -  the new changes apply to all stand-alone discharges.  That is, commercial banking teams will need to be aware of the upcoming requirements too.

Getting ready for electronic dealings

Lavan Legal is a registered subscriber to PEXA and its property and banking & finance teams are set up with the capability to undertake electronic settlements and lodgements, including the changes coming into effect on 1 August 2016.

However, in order for external providers, such as Lavan, to act on electronic lodgements under PEXA on behalf of our clients, a prescribed Client Authorisation Form is required to be entered between the client and Lavan.  The authority given may be in respect of specific transactions, a batch authority or a standing authority ending on revocation or a stated time.

The Client Authorisation provides Lavan the authority to sign the relevant instrument or document on the client’s behalf.

The model Participation Rules of the Australian Registrars National Electronic Conveyancing Council note that although the Client Authorisation empowers a subscriber to act for a client in a similar way to a power of attorney, legislation specifically states that the Client Authorisation is not a power of attorney.  The form of the Client Authorisation is prescribed under the Participation Rules.

In addition, where a client has signed up to PEXA with a Non-Transacting Panel Master Agreement or Participation Agreement, PEXA reminds us in its checklist provided to representative subscribers that the following need to be in place:

  • the client’s mortgage reference data has been uploaded to PEXA (to avoid the same being manually entered for each mortgage created in PEXA);
  • the client has set up its representative/agent as a ‘panel member’ in PEXA; and
  • the client has agreed with the agent as to how invitations will be provided to the representative/agent, and with the relevant settings in PEXA updated.

Electronic settlements

Lavan Legal’s settlements division is ready to effect settlements through the PEXA platform.  What is currently inhibiting the take up of electronic conveyancing is the reluctance of counterparties to a transaction to effect the settlement electronically.  Whilst Lavan Legal has been willing to effect settlements electronically, the other party has (in many cases) not been able or willing to do so.

Clearly that situation will change.

Electronic conveyancing will be a real advantage to land subdividers and apartment developers as bulk settlements will be able to be accommodated – meaning that money from sales may be delivered to the developers much more quickly.

Lavan Legal comment

Landgate has indicated that over time, the scope of dealings that may or must be lodged through an electronic lodgement network will expand.  As noted above, Landgate’s intentions are to work toward electronic lodgements and dealings being implemented on an accelerated basis.

Lavan Legal is available to assist our clients in conducting electronic lodgements and electronic settlements for property-related transactions.  Your relationship partners in Banking & Finance and Property would be happy to guide and work with you in preparing for the new changes on 1 August 2016, and in completing your future electronic transactions.

For further information, please contact Ben Fong (Banking & Finance) or Peter Beekink or Tamara Heng (Property Services).