With a majority of Australians working from home during the COVID-19 pandemic, it is useful to review the state of play for settling property transactions via Electronic Lodgement Operators Sympli and PEXA.
New South Wales
On 1 July 2019 the New South Wales Land Registry Service ceased accepting lodgement on paper of property transfers, mortgages, discharges and the other essential documents required to complete a conveyance. Mandatory eConveyancing had arrived. All buyers and sellers will need to use an Electronic Lodgement Operator (ELNO). From a bookkeeping and trust account management perspective, settling property transactions often involves the movement and management of large sums of trust monies. Depending on whether the funds are settled directly into the ELNO platform or transit via the law practice trust account affects what type of trust monies are being handled, as explained in detail further below. This interpretation is common to all States and Territories in Australia.
The Registrar of Land Use Victoria will not accept paper lodgement of any transaction that is available via an ELNO. The Registrar is highly supportive of e-conveyancing and the greater accuracy of data within the Victorian Online Titles System. Other benefits touted include a higher level of quality assurance and quicker processing times.
One difference in QLD is that a law practice is required to obtain approval from the Queensland Law Society to use their trust account for EFT transactions as part of an ELNO’s system. The process involves a law practice certifying that suitable practices and procedures have been implemented and will be observed.
The Law Society of South Australia has spent time clarifying how verification of identity can be handled, particularly relevant during the COVID-19 pandemic. There is no requirement under the Electronic Conveyancing National Law for a wet-signature. It is entirely possible to verify the identity of a person in a way that is defined as ‘taking reasonable steps’. Video conferencing would seem to be a practical solution to this issue.
Type of Trust Money in effect when using an ELNO as a Purchaser
When you engage a lawyer to act on a purchase, you are generally providing equity that will be later transferred to the vendor and other parties in order to settle the transfer of property to you. You will have authorised your lawyer to disburse that equity on your behalf. The location of where the funds reside is critical to understanding what type of trust monies are being managed.
Rule 55 Trust money subject to specific powers
“If a law practice or an associate of the practice is given a power to deal with trust money for or on behalf of another person, the law practice must keep:
a record of all dealings with the money to which the law practice or associate is a party, and all supporting information”
This describes the recording process for Power Money. A power can be bestowed on a practitioner in a number of ways: simply being made a signatory to a client’s account is of itself a power. Naturally a formal Power of Attorney may be enacted or other control over a client’s property deemed power money. The rule seeks to bring transparency to what a lawyer might do with a client property.
During the eConveyancing process, a lawyer accepts Power Money when an incoming mortgagee (bank) transmits money into the ELNO’s platform. The practitioner has authority to control the disbursement of those funds thus has a power. They are then obliged to record the holding and disbursing of Power Monies as described under Rule 55.
A lawyer may contemporaneously receive general Trust Monies from their client, the purchaser. They are also obliged to record the handling of Trust monies as they would in any normal circumstance.
Type of Trust Money for a Vendor
Similarly, for the vendor’s solicitor, funds within the ELNO environment may be disbursed at their discretion, acting on instructions received from their client. This is also Power Money and subject to the Rule 55 recording provisions. If funds are distributed from the ELNO platform into General Trust they necessitate recording as such.
The introduction of electronic conveyancing has brought huge advantages over the paper system, both in time efficiencies, data accuracy and convenience. With the problems caused by the COVID-19 pandemic we can add another major benefit to the working lives of those who practice conveyancing and purchasers and vendors who can access it.