According to American folk law, New York’s iconic Brooklyn Bridge was fraudulently sold to gullible immigrants and visitors dozens of times during a 20 year period between 1880-1901.  Although George C Parker and William McCloundy aka I.O.U. O’Brien were the only two ever convicted of the offence, other colourful swindlers such as Joseph “Yellow Kid” Weil, Reed C. Waddell and the Gondorf brothers were also reputed to have pulled off the scam many times over, the Gondorfs on one occasion managing to sell only half the bridge when there “mark” didn’t have enough cash.

For several years now, the state based Land Titles Registries throughout all of Australia have been agitating for the development of a national electronically based registry system to be uniform throughout each of the states and accessible to all of them. Development of this system is now well and truly progressed and the respective Governments have now announced anticipated roll out dates for the new system.

But what is e-conveyancing and is it safe?  Recent statistics indicate that 21% of all serious fraud offences committed in Australia and New Zealand involve mortgage fraud against lenders.   In the actual purchase and sale of properties however, a combination of the “Torrens Title” system (which is a State Government guarantee that the person registered as owner of a property on the title is the true owner), the rights of “caveat” which are available to anyone who wishes to challenge title and the policing of signatures on transfer documents through the requirement for those signatures to be witnessed only by licensed Solicitors, Justices of the Peace or Commissioners for Declarations have to date all been relatively effective in keeping instances of fraud on the purchase/sale of property down to minimal accounts.

With the advent of this new system however, the question obviously begs will it be as safe and more beneficial?

Below is a summary of the new system’ features:

The system will not replace the Torrens Title system in place today, this will remain.

• therefore it will retain indefeasibility of title for those persons who are in the register, this will not be affected by the new system; and
• the system will create a public e-register for title and interests in land;
• compensation will still be available to innocent parties if registrations are affected by error or fraud.

The system doesn’t create national uniform property laws – but what it will create is a uniform approach to managing and operating a single electronic land titles registration system that will make it possible to:

• settle conveyances electronically; and
• lodge the required documents with the appropriate land registry via the web.

When will the new services be rolled out?

The new national provider is to be known as PEXA (“National Property Exchange Australia”).

• Phase one of the roll out will start by the second quarter of 2013 (now) and will allow land titles officers and financial institutions to perform single party transactions, such as standalone mortgage dischargers and refinancers via the web.
• The second phase of PEXA is scheduled for the second quarter of 2014. Solicitors and conveyances will have access to PEXA as “subscribers” and multi-party transactions, such as online settlements, transfers, notices and caveats will be conducted via the web.
• Under the new system, lawyers, subscribers and conveyances will be able to use digitally recognised signatures to sign documents on behalf of clients.

Who can join the system:

The persons entitled to subscribe to the new system will be financial institutions as well as lawyers and conveyances.  There would seem no scope at this time for ordinary members of the public to use the system.  What will be the participation rules and protections put in place to eliminate opportunities for cheating and fraud:

The all important “participation rules” are still in draft form. What is clear is that:

• Professionals will be able to use digitally recognised signatures to sign documents on behalf of clients;
• PEXA will retain rights of audit to ensure compliance with its rules; and
• There will be an additional layer of regulation “in-house” and compliance obligations placed upon subscribers’ shoulders to ensure that the system remains safe.

What will be the benefits?

• The intended benefits are a far more efficient system for settling land conveyances and registering documents. At present both of these tasks require the documents to be physically transported to a common location for settlement and then physically transported to the land titles office. These document movements now will all occur electronically online and within seconds, and therefore promises to deliver significant cost and time savings.
• However, the “participation rules” may yet create a very significant additional cost on law firms to adhere to the requirements for compliance.

Lawyers’ liabilities:

Early drafts of the rules have been attempting to shift the policing responsibilities previously provided by Titles Office staff to identify fraud onto the shoulders of the law firms with the consequences that those firms will also bare personal liability for the consequences of fraud should they fail to detect it.

In addition, law firms who participate in the scheme will be subjected to periodic audits where they will be required to reproduce relevant client’s files as selected by the auditors which might be only a random few or an entire period’s batch, all of which will be an additional expense that Solicitors are not presently exposed to under the current system.

On balance, e-conveyancing certainly seems like a very exciting and dramatic development in the conveyancing world.  Like anything, the devil will be in the detail but at least on paper the new system promises to be every bit as safe and far more efficient than the present systems.

Michael Zande is the Principal of Zande Law Solicitors, with 25 years experience in practice.  Michael and his team have had extensive experience in conveyancing matters. We acknowledge the assistance of Matt Hannam in our office in researching this article. Please feel free to review our firm and staff profiles at www.zandelaw.com.au

The information in this article is merely a guide and is not a full explanation of the law. This Firm cannot take responsibility for any action readers take based on this information. When making decisions that could affect your legal rights, please contact us for professional advice.