Electronic Conveyancing in Queensland

The adoption of electronic conveyancing (eConveyancing) has been a gradual process since the establishment of the Electronic Conveyancing National Law in 2012. Although Queensland was a front-runner in the conversion to electronic titles (which was implemented in 1994, with the abolishment of paper certificates of title in 2019), the uptake of eConveyancing for property settlements in Queensland has been somewhat slower than other States. New South Wales, Victoria, South Australia and Western Australia have since mandated the use of eConveyancing for ‘mainstream’ property transactions (exceptions apply to certain types of unusual dealings). Meanwhile, parties to a settlement in Queensland currently have the choice as to whether to settle electronically or to continue to use the traditional ‘paper’ method.

However, this is all about to change. Titles Queensland has recently concluded a six-week consultation period in respect of proposed regulations to mandate the use of eConveyancing in Queensland. It is expected that from early 2023, eConveyancing will be compulsory for certain property transactions.

Now is the time for those in the industry to become familiar with eConveyancing processes and platforms, to implement the appropriate systems and procedures (or ensure that these are tested and refined), and to be ready to transact once the mandate is effective.

What is eConveyancing?

eConveyancing is the use of a web-based platform to conduct property settlement transactions. The eConveyancing platform facilitates the preparation, execution and lodgment of land title documents electronically and allows financial settlements to occur digitally through the electronic transfer of funds. There are currently two approved Electronic Lodgement Network Operators (ELNOs) in the market: PEXA and Sympli.

What will be mandated?

There is currently limited detail around the implementation of the mandate in Queensland, however, the expectation is that it will require certain classes of documents to be lodged via an ELNO, with physical lodgments no longer being accepted by Titles Queensland (subject to certain exemptions). For example, at this stage it is anticipated that the lodgment of ‘mainstream’ property transactions such as freehold releases of mortgage, transfers, mortgages, caveats and priority notices will all be required to occur electronically. This is consistent with the approach taken in other States that have already mandated eConveyancing.

Benefits of eConveyancing

There are a range of benefits associated with the use of eConveyancing, including:

• Administrative efficiencies: the preparation and lodgment of documents electronically can reduce processing delays, as lodgment with the relevant title registry occurs immediately and in most cases confirmation of registration on title is received within 24 hours. Similarly, funds are disbursed within minutes or hours of settlement, meaning that the parties entitled to receive funds do not need to wait for cheques to clear;

• Accuracy: titles information is generated and verified on the creation of a settlement workspace via the ELNO so that property and party details are automatically included. This reduces the chance of human error in the creation of land title documents and thereby minimises requisitions (facilitating prompt registration and reducing cost);

• Convenience: the COVID-19 pandemic increased the motivation for many in the industry to use eConveyancing as it avoids the need for a physical meeting. Settlement can be completed remotely – parties log on electronically, upload their documents and financial information and watch settlement occur in real time. This is particularly useful for transactions involving remote or interstate property where for a physical settlement it is necessary to engage a local agent to attend at a specified location;

• Potential for reduced costs: given that a physical settlement is not required, eConveyancing avoids the time and costs associated with drawing/banking cheques and attending a physical settlement (which can become protracted if there are issues with the documents being exchanged or parties are not on time). Similarly, there is no need to extend/reschedule a settlement if all parties are not ready at the appointed time – the workspace will continue to ‘roll’ every 30 minutes (until the cut off time for the day) until all parties are satisfied with the documents and financial information and have signed off (and parties can receive ongoing notifications regarding the status);  

• Security and certainty: digital financial settlements allow funds to be transferred securely by EFT, alleviating the need to draw, exchange and handle bank cheques. In addition, real-time titles information also means that parties are notified of any dealings lodged in respect of a title before settlement, such as last-minute caveats and priority notices; and  
  
• Bulk settlements: for property developers and development funders, eConveyancing services such as PEXA Projects present further benefits, allowing the preparation and settlement of a large number of lots in a streamlined manner. Documentation and financial information can be prepared and uploaded in bulk, GST withholding is paid directly to the ATO and reporting tools are available to provide insights into the settlement of the project as a whole.

Limitations

Whilst there are benefits associated with the use of eConveyancing and the proposed mandated use, there are some limitations including:

• Additional fees: ELNOs will charge additional fees to use their platform. However, these fees are usually less than the cost of appointing a settlement agent to attend a remote settlement on a party’s behalf;

• Classes of documents: it is expected that the mandate will capture certain classes of documents and may not apply to others (for example, potentially state leasehold and water allocations). This may mean that eConveyancing will continue to be of limited use in certain sectors (such as agribusiness where large rural properties often include associated water rights);

• Mistake/fraud: there is always the potential for mistake or fraud in eConveyancing (as there is for any transaction, including paper settlements). However, risk can be minimised with the implementation of proper safeguards such as verbal confirmation of account details. Subscribers can also restrict the persons that can sign off on electronic settlements so that authorisation from an appropriately senior person is required for the purposes of confirming documents and financial information;

• Technical issues: as with any online digital system, technical issues and outages can cause delays to settlements and there are risks relating to malicious conduct; and

• Reduced flexibility: at present, eConveyancing systems require settlements to have occurred by specified cut-off times in each jurisdiction (which can change during daylight savings time), for example, settlements in Queensland must complete by 4pm on the relevant business day. This takes away the parties’ discretion to agree to complete settlements later in the day where a transaction has been delayed or protracted, and can present issues for more complex transactions.
  

What do you need to know?

It is crucial that those in the industry are properly prepared for the eConveyancing mandate before it becomes effective. Whilst there will be some exemptions, lodgment of the relevant documents and ‘mainstream’ transactions detailed above will be required to occur electronically. McCullough Robertson are subscribers to PEXA, are actively involved in working with PEXA and the industry, and have extensive experience in eConveyancing.

If you would like to learn more or discuss the mandate further including the impact on your business, or arrange for training on navigating eConveyancing, please do not hesitate to contact a member of our team.

This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.