Electronic Conveyancing became compulsory 1 December 2018. However Neo Settlements got on board at the very beginning and has been transacting Pexa settlements since June 2016 so we are very experienced with the process of electronic settlements.
What is PEXA?
PEXA stands for Property Exchange Australia. Basically it is an online ‘workspace’ that removes the need to physically attend a settlement. Landgate, the Office of State Revenue, the banks and all the settlement agents transact together online (share information, view documents and see the progress of the transaction) until settlement is completed and documents lodged.
What are the Advantages of Pexa?
Typically, settlements via Pexa are ‘safer’ because of all the security mechanisms in place eg two step authentication to be able to log in to Pexa and change details, Pexa cross checks data with Landgate and the Office of State Revenue automatically so there is less chance of human error
For sellers they tend to receive their money within a couple of hours and not the usual 3 business days as is with manual settlements and bank cheques
For Buyers Landgate generally registers them as the new owners within hours and not the usual 3 to 6 weeks in the manual world. This is particularly helpful if you are wanting to build and the builder will not commence until you are registered as the owner of the property
More transparency involved – typically all the conveyancers can see what has and hasn’t been done in order to prepare for settlement so it is easier to chase up other parties to correct outstanding issues
What are the Disadvantages of Pexa?
In an ideal world when the seller has clear Title and the Buyer has cash Pexa is a dream because settlement agents can balance their statements and sign off days before settlement and almost “forget about it”. With banks involved Pexa is a challenge. Most of the “Cons” of Pexa relate to the actions (or inactions) of the banks. How does this affect you?
Uncertainty of the settlement date. In the manual world once a bank was ready we booked them in for a set time and date and we were 99% likely to settle at that time. With Pexa MANY banks are lax in finalizing their figures or signing off on everything in order for the workspace to proceed to settlement. Banks often let the settlement “roll over” to the next half hour or so. This does not provide any certainty to our clients or the real estate agents who are trying to organise removalists and the handover of keys
Often the banks do not enter data into the pexa workspace until the very last minute. This can cause problems to sellers who are contributing to any shortfalls to pay out their loans and to buyers who are contributing funds for settlement. In a manual world we were provided with figures from the banks at the time of booking so could give clients adequate time to get the bank and organise transfer
There is not yet enough uniformity across the banks processes – the banks don’t all enter information in the same way creating uncertainty for settlement agents trying to finalise statements for their clients
Despite the challenges created by Pexa I think most settlement agents would agree that Electronic Conveyancing is the way to go. I believe once the banks get on board and are held accountable to the Pexa guidelines then our job will be a lot easier. For our clients Pexa can give them peace of mind that their data is secure, funds are quickly transferred, documents are checked and then safely lodged.
If you have any questions about how Pexa can affect your settlement give us a call!