Electronic Conveyancing PDF

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Summary

Electronic conveyancing - this is what the assignment was on in T2 2019 ...

Description

ELECTRONIC CONVEYANCING (ASSESSMENT 1 DUE 19/08/19)  The conveyancing process is basically the transferring of title from one party to another party (during that process, parties need to organise finance, pay deposit, remove caveat on certificate of title, so title is clean and clear and can be passed on, on the settlement date)  https://www.propertyandlandtitles.vic.gov.au/land-titles/title-search

HOW DOES PHYSICAL LAND CONVEYANCE WORK? - Parties inspect (research) the property they want to purchase (physical and legal inspection – do a title search ^above link cost: $7.50) - Review the section 32 statement (a section 32 sale of land act (vic) vendor statement refers to the legal document given by the seller to the potential buyer. This document contains all the information about the property that is required by law that the seller must provide to the buyer. It includes all the info that may affect the state of the property, especially where such info may affect the decision of the buyer: https://www.thinkconveyancing.com.au/section-32) - At an auction: when a bid is accepted, the contract is finalised and there is no cooling off period (as opposed to a standard property purchase which is usually 2 or 3 days) - If you are buying property privately, you do get a cooling off period but there is a small penalty around $100 or 0.2% of the value of the property you were supposed to purchase; whichever is greater) – so there is a contract only when negotiations have finalised and the contract is signed There is something called the: 1. Settlement period; where the mortgage finances are organised with the bank, tenants are given time to vacate the property etc. can take weeks, months, longer, depending on agreement between the parties) 2. Settlement; where the money is exchanged for title to the property 3. Physical settlement; where the transfer document is executed by the transacting parties, AND duplicate certificate of title is exchanged and lodged for registration at the land registry, OR if the title is a computer title, there is no lodgement of the certificate title but the transfer is scanned and details are added to the computer file following lodgement (this is where electronic conveyancing comes into play); the title becomes to exist in a computer format; it is not a paper title Computerised Title + Problems  Computerised title means that possession of a physical duplicate certificate of title is no longer regarded as evidence of title  The title exists in a digital format as opposed to paper format  The title is updated via scanned transfer documents  The shift to computerised title has made it much more difficult to potentially commit fraud (i.e. by taking a family members cert of title and borrowing money against their home and never paying it back; or transferring title to themselves with forged signatures)  But that is not to say that there are no risks with computerised titles and programs such as PEXA (property exchange Australia Limited) – what if there is a power outage

or failure while the transaction is taking place? Of course there are power generators (back up power supplies) but this would interrupt the transfer, and could corrupt the transaction. PEXA says if there was such a delay, it would affect both parties equally; no one party will not be affected more or be worse off than the other and therefore, when the power is back on, they can simply follow through with the transfer Physical Conveyancing/Paper Titles + Problems  Time consuming (executing documents, meetings with clients/chasing up clients for signatures)  Potential for error (reliance upon physical instrument which may contain errors, i.e. name is spelt wrong/typos etc.)  Potential for fraud (forged instruments/incorrect attestation/impersonation signatures) The shift to digital processing... (means digitally uploaded documents, no physical documents) 1. Completely disengages transacting parties from the process of (physically) executing transfer and mortgage documents – so you must engage a professional 2. Authorises third parties (your solicitor/representative) to execute those ‘digital’ instruments, utilising a digital signature that they have been authorised (by you, the client) to apply 3. Verifies the identity of parties (the client/s) 4. Executes ‘digital’ instruments utilising new cryptography technology These are some changes that have occurred: (a paper contract must still be signed but) - Conveyancing documents are virtual - Settlement is virtual - The clients do not execute the documents, their solicitor/conveyancer/representative does this via the virtual workspace (PEXA) - Digital signatures replace traditional execution (except for sale contracts) - Virtual instruments with digital signatures may be registered under the Torrens framework and will obtain the benefit of registration Acronyms 1. ARNECC 2. ELNO: electronic lodgement network operator (PEXA: which is the only platform on the market at the moment; no competitors) 3. MOR: model operation requirement 4. MPR: model participation rules

Regulatory framework for E-conveyancing in Vic Electronic Conveyancing (Adoption of National Law) Act 2013 (Vic). (see Appendix) 

The national regulatory framework for e-conveyancing was developed by the ARNECC – two sets of rules have been made, pursuant to the ECNL

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1. MPR, which govern the relationship between ELNO and participants in the system such as lawyers; and 2. MOR, which govern the relationship between ELNO and the land title registries To be a subscriber under the ECNL, the person/partnership must comply with MPR requirements (MPR version 5); must be: o Of good character o Not insolvent within preceding 5 years o Not have a conviction for fraud, an indictable offence or any offence for dishonesty regarding business, professional or commercial affairs

1. CLIENT AUTHORISATION For a practitioner to conduct the client’s conveyance using the e-platform, the client must provide written authorisation (not power of attorney) in the form of a client authorisation, a form in sch 4 of the MPR. Through the CA, the client expressly authorises the signing of documents on their behalf (which is solely done by the practitioners), the lodgement of documents such as transfers for registration, the financial settlement of the conveyance and anything else necessary to complete the transaction. (see appendix: pt 2 div 2 ss 10-11) 2. VERIFICATION OF IDENTITY Sch 8 of the MPR contains the verification of identity standard (VOIS). Compliance with the VOIS ensures that a practitioner will be deemed to have taken reasonable steps to identify the client. The advantage of this is that the practitioner avoids the evidentiary burden of establishing they took reasonable steps in identifying their client the verification may be undertaken by the practitioner or may be provided by an Identity Agent. 3. DIGITAL SIGNATURES Documents such as the transfer and financial settlement statement are digitally signed in the electronic workspace using a digital certificate. The practitioner that is appointed, will be the signer. They will have their identity verified and will be authorised to digitally sign registry instruments and financial settlement statements. NOTE: a digital signature is not an electronic signature, as it is created and verified by cryptography and involves the use of an algorithm that utilises a “key” (sort of like a USB) that must be ‘inserted’, as a security protocol. Also, a subscriber can repudiate the signature if it was not created by them: ENCL s 12(4). 4. ELECTRONIC CERTIFICATE OF TITLE As it is not possible to provide a paper certificate of title in an electronic workspace for settlement, a new approach is required. In Vic, an option has been introduced where certain parties can elect to have an electronic certificate of title (eCT). At present, eligibility for an eCT is limited to APRA regulated financial institutions who hold a registered first mortgage and are subscribers to PEXA or are represented by a subscriber to PEXA (such as banks, credit unions etc.)

PEXA

PEXA is a company that provides the electronic platform and the electronic system; it is a limited company owned by shareholders (the shareholders are the state governments, and the big 4 banks). The relationship between PEXA and legal practitioners is governed by the Participation Agreement. The PA incorporates a number of other documents/policies such as:  The service charter (how PEXA is run + the promises they make), the security policy, the pricing policy, and the standard operating environment requirements  For example, the security policy (version 2.4) places a lot of the onus on the subscriber (i.e. lawyer/law firm) to ensure security of all of its systems and to prevent unauthorised access to PEXA’s system (i.e. to protect themselves) RISKS OF E-CONVEYANCING  Practitioners may participate in electronic workspace without being fully aware of the statutory/contractual/business rules that underpin its operation  The need to maintain appropriate computer system security (virus+firewalls) and consequences of failure to do so  Obligations to keep secure digital certificate hardware and passwords  Inadequate maintenance and storage of paper records re client authorisation/verification  Whether clients accept transaction fees payable for the use of PEXA BENEFITS OF E-CONVEYANCING  Greater assurance and protection for parties that dealings will be registered almost immediately after settlement (avoiding risks of delays)  Reduction in time and cost spent chasing down parties and instructing agents of their attendance at physical settlements etc  Immediate distribution of the proceeds of sale (post settlement)...