NECS - What it does - what it doesn't do

The proposed NECS focuses on the lodgment and settlement stages of conveyancing. Using NECS, practitioners would electronically:

• prepare dealings and related instruments to register changes in ownership and interests


• settle financial transactions (including payment of duties, taxes and any disbursements)


• lodge their dealings with the appropriate Land Registry


• receive confirmation of dealing lodgment and registration.

The proposed NECS does not cover:

• preparation and exchange of contracts for sale


• pre-settlement investigations


• procurement of any insurances required by purchasers


• creation of loan documentation


• processes for examining and registering instruments once lodged with a Land Registry.

Source NECS

EC lists banks for Stage 1 Pilot

EC (Victoria) will begin testing their refinancing settlements model. Financial Institutions will be able to perform a discharge & registration of a new mortgage. My understanding this does not include the exchange of funds, simply the registration angle. Stage 1 will go live from 25 August 2006. And the participants are -

• ANZ


• Commonwealth


• Westpac


• Bendigo Bank


• Suncorp Metway


• Macquarie Bank


• Gadens (representing ING)


• Members Equity

Where's the NAB & St George?

Other news from the EC Project team is Stage 2 which is the full settlements model is not expected to be ready for roll out until late 2007. And after that is the national implementation under NECS.

All good stuff.

UK moving towards Vendor Disclosure

"Currently, one million pounds a day is wasted on buying and selling homes. Buyers often spend hundreds of pounds on valuations, legal advice and searches on sales that ultimately break down," UK Housing minister, Yvette Cooper said,

"By providing key information at the beginning of the process, Hips (Home information packs) will prevent waste and significantly cut the number of sales that fall through. That is why consumer groups have been calling for them for years."

Many property investors are supporting Hips because it is argued that they will bring a solid foundation of first-time buyers to the market. Additionally, statistics suggest that more than 40 per cent of failed transactions collapse because of a problem with the survey or a valuation inspection.

If this process is made more transparent, supporters claim that buyers will be less reluctant to make a move on the property market.

Source Assetz Property News Service

Online, Some Home Buyers Find a House of Cards

Online listings have created an opportunity for unscrupulous sellers to try and resell dilapidated houses for inflated prices.

By KATIE HAFNER - NYT

End of 2006 will see agreement on how NECS is implemented

The National Steering Committee held its second meeting in Sydney on 24 February 2006 and approved the program of work that will lead to a decision about implementing a National Electronic Conveyancing System (NECS) by the end of this year. The work program includes an extensive period of consultation with government and industry participants in all States and Territories as well as four independent consultancies to advise on special aspects of the NECS.

National Consultation
The Steering Committee approved a change to the way consultation will be organised. Instead of having four forums made up of Land Registries, Revenue Offices, Financial Institutions and Legal Practitioners/Conveyancers as was originally provided for in the National Governance Arrangements, the forums are now to be based upon the major processes in using the NECS to complete a transaction.

The four forums are to be:
User Identification, Accreditation and Training, focusing on who can use the NECS and what the pre-requisites are.
System Access and Usage, focusing on the rules applying to users of the NECS and how it will be used.
Lodgment Process and Security, focusing on the preparation of dealings and instruments and assuring their integrity and security prior to lodgment with a Land Registry
Settlement Process and Payments, focusing on the preparation and execution of financial settlements as well as the payment of fees when a settlement is not available

Source Electronic Conveyancing in NSW - Newsletter No. 14

Negotiating the deal

I picked up a book from a Glenferrie Road Thrift Shop "Success in Property Development" published 1989 written by Chris Lang of Gardner + Lang. The book gave insights into the property development deals of the 80s as well as a typical overview on how to structure & model a commercial property development syndicate.

In the appendix Chris wrapped up by distilling the 3 crucial elements in negotiating the deal: information, time and power.

Information Someone said that 'to be forewarned is to be forearmed" and information is forewarning. Gather all the information you can about the property you want to buy and the person or firm from whom you want to buy and about his/her agents. Herb Cohen in his landmark book You Can Negotiate Anything, wrote: 'Remember that what you want to know going into the negotiation process is the real limits of the other side ... the extent beyond which they will not go.'

Time Coher further wrote: 'Dont be surprised when you receive the initial reaction to your proposal. "No" is a reaction - not a position. With the passage of sufficient time and repeated effort on your part ... every "no" can be transformed into a "maybe" and eventually a "yes".'
Sometimes an excellent deal can be done by grasping an unexpected chance quickly. If you have fast access to money you can snatch a property that comes on the market without warning, offered by a vendor who urgently needs to sell, often at a reduced price.
But that is the exception. In most negotiations it is a plus to possess a great deal of patience. The fact is deadlines are often fictitious - products themselves of the negotiating process - 'Let's get the deal wrapped up by Friday.' Therefore, they are more flexible than you realise. Another fact is that shifts in position are made towards the end of a negotiation, not at the beginning when the parties are trying to get the feel of the deal; indeed Cohen states that '80 per cent of all concessions are made in the last 20 per cent of the negotiating process.' Of course you have an advantage if you know the other party does have an urgent need to finalise; it means you can hasten very slowly indeed in the hope of forcing concessions - again, the value of having as much information as possible.

Power Then there is power - of which Henry Ford said: "Power is based upon perception. If you think you've got it, then you've got it. If you think you don't have it (even if you've got it) then you don't have it.'
Some people have a lot more financial muscle than others. But some people have more muscle than they realise. When I talk to a lot a first home buyers I say to them, 'Do you realise you have a lot of power when you are sitting opposite the bank manager and asking for money?' They say: 'You've got to be joking. He's got the money, so how do you have any power?' I say: 'It's simple: You are talking to one bank manager and you say to your fiance who banks with another: "Look dear, I'm not sure whether we should get it here or perhaps from your bank." The chances are the first bank manager won't let ou get out the door. When you ask for money, he's going to find it very hard to turn you down.'
The power principle in negotiations is that you have to create the illusion of options; you let the vendor party know that you are considering the puchase of other properties - it does not realy matter to you whether you buy their property or some one else's.
Expertise is another important negotiatiing tool. The other party tends to respect you if you clearly know what you are about - but, of course, the newcomer investor cannot really know; that's where your retained estate agent can put the advantages of technical knowledge and experience in your corner.
Always remember: if you let the vendor name the price, you can name the terms - the way the price is going to be paid.

NECS - an outsiders perspective

NECS (the national Electronic Conveyancing System) has a pretty big task ahead of itself. The focus has shifted from a Victorian based electronic lodgment and financial settlement system to a national system. NECS has to bring together and align the interests of all land registries; financial institutions (FIs); lawyers and conveyancers; state revenue collectors; certificate brokers; local councils and water board; and even the Reserve Bank. No small outcome. However a national approach is essential.

Without a single national approach you would be duplicating the current 8 states’ and territories’ physical settlements with 16. This is OK for lawyers and conveyancers who only act locally but not for FIs. The FIs certainly support and would have been the prime advocates for the single national system.

A few singular observations:

1) If you are acting for a client, either a vendor or a purchaser, how do you know if the transaction will be paper or EC?
2) Why should we hand over consideration for title and an executed transfer & discharge of mortgage without knowing if the documentation will be registered or defeated by caveat, fraud or requisition?
3) Under EC the parties create an Electronic Lodgment File (ELF) to transfer the freehold interest from the Registered Proprietor to the Transferee. I presume the same ELF creates the mortgagee interest. What paper documentation supports the transaction?

Which is it? NECS or paper / physical settlement

It is unclear which party is going to initiate the process. The current NZ experience is 1/20 is performed electronically. 19/20 are still paper / physical settlements. This is frustrating to parties that wish to transact electronically. Lawyers / Conveyancers that wish to transact electronically can be hamstrung by those who unfortunately are the majority who will not change.

I suggest:
A. The Vendor Lawyer contracts as a special condition:
(a) the Vendor will meet the cost of EC; and if the Purchaser elects otherwise
(b) The Purchaser will meet the costs of all parties to attend physical settlement

B. Registration Fees – Give a discount of 10 – 50% on registration fees if EC applies and the full tote is applied to lodgments that are done over the counter. Ditto for stamp duty.

Registered vs Registrable Interest

Our current system on the face of it seems to work (but could it be made to work better). In some overseas jurisdictions registration occurs first then the funds are handed over. This makes sense. Purchasers once they and their FI has handed over clear funds, receive title and transfer and discharge of mortgage supposedly in registrable form. But the Purchaser is still at risk until registration ultimately occurs. Despite final searches, caveats by third parties can still be lodged. Fraud can defeat a Purchaser. Requisitions can be raised. Transfers are sometimes not lodged. Think Grove Conveyancing. There is still an element of uncertainty until registration is effected. And the practice of lodging caveats seems to have waned.

How could it be done better?
NECS. Could a two stage settlement be the preferred model? NECS is proposing a concurrent system of electronic registration of the ELF and simultaneous financial settlement. This in a way is emulating the current system but probably more certainty that registration occurs contemporaneously with transfer of funds. What about separating the registration and financial settlement?

(a) Electronic lodgment takes place 1 day or 2 days prior to financial settlement. Registration occurs “in escrow”. Like a decree nisi
(b) Upon notice of registration, you have financial settlement, either by EFT or bank cheques are handed over. Registration becomes complete. Decree absolute.

This 2 stage settlement process would perhaps allow more complex conveyancing transactions to take place and create a more flexible hybrid system to evolve.

NECS and the Paper Trail

What paper is or won’t be needed under NECS? There has been very little published on the nuts and bolts of EC or NECS. I am therefore looking a little ahead of time and trying to see what practical differences there will be between the two systems from the critical documentation trail that currently exists. Click on image to enlarge.

First Title Insurance - defence against fraud

When anyone falls victim to real estate fraud, even though it might not be that common, the size of the fraud always has a much greater impact than say credit card fraud. The statistics from Canada suggest the average loss on real estate fraud is $300,000 in comparison with the average loss on credit card fraud is $1200.
A recent press release from Canadian First Title Insurance gves an interesting insight to some systematic real estate fraud involving Vancouver lawyer Martin Wirick.
After four years of investigations, recently approved $32.5 million in payments to cover a multimillion-dollar real estate fraud case The high-profile case involved transactions between 1998 and 2002 and affected hundreds of victims in the scheme.

I personally am looking to systematically recommend clients purchase a title insurance policy. If anything such advice protects me.

Mirvac triumphs in misrepresentation case

Mirvac scores a victory in the misrepesentation case brought against them by Jerrard & Stuk acting for investor Joseph Peter La Rocca.

The Age reported:
Mr La Rocca claimed Mirvac's agent, Margaret McBride, had made representations that the apartment would be on the 16th floor, would have uninterrupted views of Port Phillip Bay, would double in value in five years and could be rented for $2000 a week.

He claimed that none of these conditions had been met and his off-the-plan contract did not comply with the Domestic Building Contracts Act, which made the contract void.

The heated Supreme Court dispute included a witness statement lodged by Mirvac sales manager Graham Katz that alleged Mr La Rocca had said: "I have $30,000 in the bank, I'd rather pay them (his lawyers) than you. I've been to court and the best liars win."

Yesterday, Justice Hargrave described the contract of sale as "just, fair and reasonable", before ordering Mr La Rocca to pay a $96,000 deposit, plus interest and legal costs, which could total almost $500,000.

In his ruling, Justice Hargrave dismissed all claims that Mr La Rocca had been induced into the contract by misrepresentations or that Mirvac had acted unconscionably.

The case had challenged the enforcement of off-the-plan contracts and threatened a flurry of legal action by dissatisfied apartment investors.

My observation that I made earlier is that this case and any case for that matter came down to the facts and the quality of the witnesses, evidence and corroboration of the evidence. Mr Rocca was very well represented. It would appear, however, Mr Rocca did not make the best witness. Misrepresentation is always difficult to prove as you are moving outside the boundaries of the Contract. The case certainly stands for one thing and that is it validates off-the-plan contracts in Victoria.

A paragraph lifted from the judgement
"The defendant was a most unsatisfactory witness. He is not unintelligent and clearly has a reasonable degree of business acumen. From my observation of him, he well understood the factual issues about which he was giving evidence. Notwithstanding these matters, the defendant gave inconsistent evidence on important issues, was evasive when challenged with these inconsistencies, was argumentative and prone to speculation and reconstruction. At times, he gave definite evidence that things did not happen when it was clear he had no recollection at all about the subject matter of the questioning. As appears hereafter, he admitted misleading Mr Katz in conversations with him. On occasions, his instructions to his lawyers were plainly false, and he could not justify them upon cross-examination. Finally, as will appear, I am satisfied that the defendant set out to mislead the Court as to the extent of his knowledge of a letter to the plaintiff which was signed by him, but which he says was written by his wife, as to the circumstances of him signing that letter and as to the reason why his wife did not give evidence at the trial".

NZ e-dealing reports major outage

The NZ e-dealing system reported a major outage. Landonline was out of commission 30 November until the morning of 2 December 2005.

The disk failure at the "back end" which caused Landonline to be out of commission from 30 November until the morning of 2 December resulted from a disk microcode problem that affected the movement of data between the databases, their associated server processors and the storage area network hardware. Microcode, which is sometimes called firmware, is in almost every modern electronic device we use – it is not specific to the Landonline system. Our software and hardware suppliers have fixed the problem and fully analysed and reported the cause to management. They are of the very firm view the chances of this type of event re-occurring are extremely remote.

The full report

UK electronic conveyancing 2009

It looks like UK and Australia are in step with the government land registries introducing electronic conveyancing.

Australia's national e-convyancing project is focused on settlements, electronic lodgment of dealings such as transfers &mortgages and the simultaneous online transfer of settlement funds.

A brief description in a UK release is "all conveyancing for people buying and selling property in England and Wales could be carried out electronically by 2009. Under the new system solicitors will no longer have to send paper documents, such as contracts, to each other through the post, but will be able to transfer them instantly electronically".

This sounds a bit like the UK system may bit a bit more embrasive if it includes electronic contracts. The Australian system specifically does not include the contractual phase.

Parliamentary Under Secretary of State for Constitutional Affairs Baroness Ashton of Upholland said in a written statement to the Lords that electronic conveyancing could be made compulsory in England and Wales by 2009 or 2010.

A prototype of the system is being tested by solicitors in Portsmouth and Bristol this year, and a wider pilot scheme will be carried out during the second half of 2007.

The latest UK programme milestones. E-Conveyancing at a glance

Australia's timetable is much the same.

Boardroom Auction settles business partners’ dispute

Not exactly conveyancing, however it is interesting to report on how two partners in business for 10 years, which turned over $2M, settled their irreconcilable differences by bidding for the other’s 50% share in a board room auction.

Via the accountant, these partners had for over 4 years being trying to sort out their problems but nothing was really working and neither talking to the other that much. Probably sounds familiar to a lot of people.

When I was engaged last November, my client made it clear to me he had hit the end of the road (as far as he was concerned the partnership was finished). The problem was the other partner still wanted to maintain the status quo despite the deep seated issues.

My summation was that this was going to either end in tears or the business partnership was terminated by one party buying the other party’s share. I made it clear upfront I was not interested in acting if this was going to end in court and protracted litigation or just as worse appointing an administrator.

Interestingly, the best negotiations take place around the table. It avoids the endless rounds of exchange of letters, each side trying to point score.

After a couple of stalled moments, a Heads of Agreement was reached, each side had arranged their finance and the parties were in the position to seriously focus on the moment of truth and face each other in a board room auction. The parties themselves determined the auction rules.

1. The Heads of Agreement was signed before the auction began
2. No bid was to be less than $20,000
3. Each party could take at any time a 5 minute break to consider their next bid
4. A 20% deposit to be paid
5. There were very extremely serious penalties for the winning bidder if they defaulted.

I must say there is a certain thrill in witnessing such events, bidding tactics only reveals themselves as each bid is made and the outcome was completely unpredictable. I think I could warm to becoming an auctioneer.

internet marketing

According to a recent New York Times article the Web is already displacing the initial contact that agents have with customers. To quote "A recent National Association of Realtors survey found that 77 percent of home buyers use the Internet to search for a home".

Speaking to some local estate agents their internal figures show the Internet and the Board account for 62% of inquiry. The net is proving to be the first and foremost effective and cost efficient form of advertising and marketing. No surprise there.

A vendor needs quality photography and floor plans which forms the basis of the advertising campaign. Photos and floor plans can be used and re-used in the campaign: the internet, the board, the agent's window, the flyers, the company magazine.

What makes up the other 38% of inquiry? You could say the Classifieds like the Age or local paper advertising. The problem with the Classifieds is it's the most expensive and possibly the least effective. The Classifieds may only account for 10% inquiry but it eats up a substantial part of any advertising budget. Another drawback is The Age or SMH are too widespread and you don't get much bang for your buck. Think about it - most residential buyers are locals, buying and selling local. They may be upgrading. It is not that infrequent you hear the neighbour buys the house next door. Or the buyer is shifting to a more affluent suburb but in the same locale. So the local paper is probably more effective.

Personally, I think the 38% is by careful selection of your selling agent in the local area. How do you select the right agent? Difficult question. I'm just a solicitor. It certainly doesn't hurt to follow a recommendation or referral.

Three websites mentioned in the NYT article
Zillow.com
Redfin.com
PropertyShark.com
These 3 sites are all worthy of seeing future directions in real estate marketing

Does digital conveyancing work?

Month	New files	Month	New files
Aug 04	20	Aug 05	50
Sep 04	12	Sep 05	52
Oct 04	15	Oct 05	51
Nov 04	25	Nov 05	52
Dec 04	17	Dec 05	30
Jan 05	17	Jan 06	53

The above table records the comparison of new files opened by my legal firm (sole practitioner) comparing monthly figures. Some months there has been a 100% increase in new files, others 4 times, recently 3 times. But at all times there has been a significant increase in new files opened, as a direct response to using and promoting digital conveyancing.

Conveyancers target Sunshine State

AFTER breaking open the conveyancing market in Victoria, the nation's non-lawyer conveyancers are turning their sights on Queensland - the last state in which solicitors enjoy a statutory monopoly on property transfers.
Coveyancers are planning a national summit to prepare their tactics for a renewed assault on the Queensland market.
After Victoria's decision last week to open the conveyancing market to full competition, Australian Institute of Conveyancers national president Terry Allen called on the Queensland Government to fall into line with the rest of the nation. He said conveyancers from around the nation had been planning to meet in Melbourne on February 18, but after the Victorian breakthrough, Queensland would be high on the agenda.

The Australian January 2006

300% inrease in turnover

247legal.com.au has established online business methodologies for delivering contract and vendor statements digitally. My law firm Hayton Kosky is the trial guinea pig for testing the effectiveness of the system. I have been trialing the vendor disclosure module for the last 12 months. The last 6 months it has really hit home the effectiveness, the efficiencies and acceptance of the model by estate agents, clients and my legal staff. Every month for the last 6 months I have been setting new records for new business and this is essentially based on referrals from estate agents that have embraced the 247 system.
This January (2006) there was a 300% increase in business (new files opened) over January 2005. There has been a consistent increase in files opened. The volume of files is only a pinprick, but they form the blueprint for other lawyers and conveyancers to follow. See comparative table above.

The 247 system will be ready for launch for lawyers and conveyancers following some critical development with GXS / GlobalX, feedback from members and some further testing.

Council refuses planning permit for a swimming pool - breaches covenant

What do you do when your local council refuses you a swimming pool permit because it would breach a registered restrictive covenant? Perhaps have the local council weasel arrested by the Police for making another stupid decision. What options do you have? You could make application to the Supreme Court to have the covenant removed or amended. This could cost you $15000 to $25000, a lot of time and with no guarantee that you would still succeed. Or as one punter did, he appealed the Council's decision to refuse to grant the Permit and took his case to VCAT. In fact the Tribunal member decided this one on the spot. He too obviously can recognise stupid decisions when he sees one. Anecdotally I have been hearing a number of people affected by similar restrictive covenants been refused permits for a swimming pool.

The restrictive coveant in question is quite common in the sandbelt areas of bayside Melbourne and were placed on title by developers in the 1920s to 1950s which was the era before planning schemes were adopted. A typical covenant will read
Will not excavate carry away or remove or permit to be excavated carried away or removed from the land hereby transferred any earth clay stone gravel or sand except for the purpose of excavating for the foundations of any buildings to be erected thereon or use or permit or allow the said land to be used for the manufacture or winning of bricks tiles or pottery ware.

Such covenants evolved to preserve an aesthetic standard and I could not ever think any covenant was meant to restrict the construction of a swimming pool.

Impact of Allens Conveyancing Review & Electronic Conveyancing

If I can interpret Recommendation 1 of the Allens Conveyancing Review Report and the Government's response, the State Government will be looking into ways of making electronic settlements de rigeur with an appropriate regulatory framework.
If I can suggest the main way forward for the conveyancing industry:

• regulation of conveyancers to ensure compulsory insurance and minimum qualifications
  
• putting a sunset clause on using paper based systems, say 5 years


• significant price differential on registration fees of transfers, say 50%

The report touched on this and the government has indicated calling for a Business Impact Assessment to look into these issues. This way competetion, efficiencies and cost savings to the public will prevail.

Government response to Allens Report

EC - Land Registry expects 80% uptake

Land Registry believes that over a period of a couple of years EC could represent up to 80 per cent of all settlements. Title transfers will still be allowed to be processed using the current paper-based conveyancing processes.
No physical settlement will occur in the EC system; with settlement, lodgement and notification of transaction details to relevant statutory authorities occurring electronically, in one continuous consecutive combination.
While the EC system will run in parallel with the paper-based lodgement processes, the survey conducted for this review identified a strong likelihood that the EC system will be supported by suppliers of conveyancing services (see figure 2.1). Land Victoria suggests that about 20 per cent of conveyancing will still be done using the paper system.

Final Report - Regulation of Conveyancing Services in Victoria

for-sale-by-owners property web site

MADISON, Wisconsin. - Across the country, the National Association of Realtors and the 6 percent commission that most of its members charge to sell a house are under assault by government officials, consumer advocates, lawyers and ambitious entrepreneurs. But the most effective challenge so far emanates from a spare bedroom in the modest home here of Christie Miller.
Ms. Miller, 38, a former social worker who favors fuzzy slippers, and her cousin, Mary Clare Murphy, 51, operate what real estate professionals believe to be the largest for-sale-by-owner Web site in the country.
They have turned Madison, a city of 208,000 known for its liberal politics, into one of the most active for-sale-by-owner markets in the country. And their success suggests that, in challenging the Realtor association's dominance of home sales, they may have hit on a winning formula that has eluded many other upstarts. Their site, FsboMadison.com (pronounced FIZZ-boh) holds a nearly 20 percent share of the Dane County market for residential real estate listings.

To real estate agents, "for sale by owner" conjures up some cranky tightwad trying to sell an overpriced, ramshackle house. Agents utter FSBO as if there was something foul stuck to the bottom of their shoe. "It's a commission-avoidance scheme," said Sheridan Glen, manager of the downtown Madison office for Wisconsin's biggest real estate broker, the First Weber Group.
Mr. Glen ticks off the tasks that real estate agents handle: using market expertise to price a house; advertising and showing it; negotiating an offer; organizing the paperwork for closing. "We do a good job," he said. "We deserve 6 or 7 percent."

New York Times

The website has very little design aesthetic - but just consider the impact of the concept.
Will this ever take off in Australia? A major difference is Australian agents dont charge 6% more likely to be in a range of 1 - 3%
Another twist is I believe a local Melbourne Agent is toying with the idea of delegating the Open For Inspections direct to the client.

realestate.com.au

November was a record month for realestate.com.au. The number of Australian agents using realestate.com.au or realcommercial.com.au increased to 7013 (an estimated 83% of the market), monthly visitors to realestate.com.au increased to 2.36m

More than 350,000 properties are marketed for sale and for rent on the site each month

ASX company announcement 23 Dec 2005

It cant be that far off before it hits close to 100%. For example, if you want to rent a property in Brighton or Sandringham (Melbourne) the Age has a handful of classified listings (that's basically zero support from the local estate agents)

The Age property liftout each weekend is a pretty slim publication. Quite compact really.

Tim Berner Lees - inventor of the internet

"I just played my part. I built on the work of others -- the Internet, invented 20 years before the web, by Vint Cerf and Bob Kahn and colleagues, for example, and hypertext, a word coined by Ted Nelson for an idea of links which was already implemented in many non-networked systems. I just put these technologies together. And then, it all took off because of this amazing community of enthusiasts, who have done such incredible things with the technology, and are still advancing it in so many ways".

19 December 2005

Digital / Electronic Conveyancing

Parker Duofold Pinstripe Centennial

Parker Duofold Pinstripe Centennial, Will Lau

The mission

To create an industry standard in digital conveyancing

A uniform standard and common approach. The aim is to create a system which is easy to use for everyone involved. Every user has their own unique perspective. The Vendor. The Prospective Buyer. The Purchaser. The Estate Agent. The Law Firm. The Conveyancing Clerk. Valuers. Lenders. Government.

Standardisation is something the industry is a little bit short of by a long mile.

The concept of digital conveyancing is new. I believe the future lies herein. Therein we can sow the seed of its success through establishing standards that will benefit everyone.

I have spoken already about Vendor Disclosure. The majority of Australian States & Territories have vendor disclosure. An online methodology of publishing vendor sales documentation is the obvious or almost perfect approach to the creation and distribution of contracts & vendor statements, title documents & property certificates. An industry website for lawyers and estate agents can set the standards for digital conveyancing to achieve the above.

There are two strands to a set of standards.

• systems. 247legal is creating the framework for the requisite systems of a digital conveyancing network. Over time the system can be fine tuned by user feedback.
  
• standard contracts and vendor statements. Here is where we need peer input into creating standard form contracts and vendor statements. Somehow every lawyer and conveyancer has their own standard template. Outside and within the legal profession there is a clarion call to adopt an industry template. At least for the common residential sale which make up 90%+ of all sales.
  

I have placed a link to my standard contract and vendor statement. Download them, measure them against you own in-house version, and criticise the bejesus out of them. Cut, delete, add and modify. Email me your suggestions and changes. For example, should we include a standard "subject to building inspection" clause which the agent can tick if applicable. Do we include the statutory conditions that the ACT contract must now include? In the end the industry will be the greatest beneficiary.

1. Contract
   
2. Vendors Statement
   

Digital conveyancing standards, I envisage, will be created through technical debate by members on the mailing list (the Interest Group). Any issues can be resolved by consensus of a smaller Working Group which is supported by the Interest Group. Most of the design can be accomplished using a combination of email, teleconferences and the occasional face-to-face meeting

247legal with flickr

Tasmania - Vendor Disclosure

Tasmania is about to become the latest state to join the Vendor Disclosure regime for property sales. Goodbye Caveat Emptor.

Tim Tierney Lawyer with Baker Tierney & Wilson Huonville Tas has written a paper on Vendor Disclosure and Cooling Off as it will apply to Tasmania.

The latest update is Tasmanian parliament has introduced a bill which is now enacted. The bill is available from www.parliament.tas.gov.au

Extract:
Section 185. Vendors to provide relevant disclosure documents

(1) When offering land for sale, a vendor or any agent of the vendor must ensure that the relevant disclosure documents are available to a purchaser in one or more of the following ways:

(b) in an electronic format that enables the information to be printed and saved to an electronic file;

When proclaimed the Act will be available from www.thelaw.tas.gov.au

Tim's paper which is a precis of the new act and which he delivered to a seminar for the Law Society. You can download and read the Disclosure Paper or the short version

Through the Property Law Group of Law Council Tim wrote to the Tasmanian attorney general and suggested she have uniformity as a keystone of Vendor disclosure reform. She replied that Tasmania is different and the government would do what they thought best!!!!!

The Digital Office

Three practical steps to cutting your ties with paper. Your initial office procurement requirements

1. Document Feed Scanner
   
2. Acrobat Standard
   
3. Fax to Email service
   

Getting combat ready for the digital office, these are the first steps in the war against paper. Winning the war is easier than you think. This is a theme I will be coming back to time and time again.

Conveyancing Milestones - 50 years

A brief critique on the history and milestones of conveyancing practice from 1955 to 2005. Company share titles to the Wang wordprocessor, Vendor Disclosure to Digital & Electronic Conveyancing, yesterday today and tomorrow.

The father of modern conveyancing -

1857 Real Property (South Australia) Act - Sir Robert Richard Torrens

From a Victorian perspective

• 1950s
  
  
  
  • Company Share
    
  • Stratum Title
    
  
  
• 1960s
  
  
  
  • Strata Title
    
  
  
• 1970s
  
  
  
  • Wang Word Processing
    
  
  
• 1980s
  
  
  
  • Fax Machine
    
  • WordPerfect for DOS
    
  • Data Merging with Documents - LawPerfect
    
  • Vendor Disclosure - Vendor Statements
    
  • Subdivision Act 1988
    
  
  
• 1990s
  
  
  
  • Electronic Title Searching
    
  • Browser Title Searching & Brokers
    
  • Off the Plan Sales
    
  
  
• 2000
  
  
  
  • www.realestate.com.au
    
  • www.domain.com.au
    
  • mortgage brokers come to the fore
    
  
  
• 2005 -
  
  
  
  • Data + Document Merging
    
  • XML data interchange between industry sectors
    
  • LIXI XML standards for electronic mortgage applications
    
  • PDF as the document standard
    
  • Digital Conveyancing Networks
    
  • Electronic Settlements and Lodgments
    
  • Digital Contracts + digital signatures
    
  • Scanners replace the photocopier
    
  • Digital Archives
    
  • Zillow like mapping
    
  
  

I would love to hear comments from fellow practitioners of the art of conveyancing

Conveyancing milestones

South Australia - Vendor Disclosure

The Land and Business (Sale and Conveyancing) Act 1994 (SA) provides that at least 10 days before settlement the vendor must serve on the purchaser a statement in the form prescribed by regulation setting
out:
• the rights of the purchaser under section 5 (in relation to cooling off periods);
• details of all mortgages, charges and prescribed encumbrances affecting the land;
• if the vendor has obtained title within the last 12 months, all transactions involving transfer of title in that period; and
• any prescribed matters.

For the purposes of vendor disclosure, this last point is of the most operative effect, as the forms prescribed by the regulations are of a very detailed nature, essentially requiring the vendor to disclose any matter affecting, presently or prospectively, title to, or possession or enjoyment of the land.

Where a vendor makes a defective statement in relation to one of these matters that prejudices the purchaser, the purchaser may apply to the court for an order declaring the contract void and/or awarding damages or making any other order that is just in the circumstances. Furthermore, failing to comply with these disclosure requirements constitutes an offence punishable by a fine of up to $2,500. It is a defence in criminal or civil proceedings if:
• the alleged contravention was unintentional and did not result from negligence;
• the alleged contravention was due to reliance on information received from a person or body whom the vendor was required to obtain the information from under the regulations; or
• the purchaser waived compliance with the matter in question after obtaining legal advice on the issue.

The Act also specifically provides that it does not affect the existence of any other civil remedies.

Source Tasmania Law Reform Report

ACT Vendor Disclosure

In the Australian Capital Territory the newly introduced Civil Law (Sale of Residential Property)Act 2003 came into effect on 1 July 2004. This legislation seeks to balance the rights of the seller and buyer. The legislation introduces comprehensive reforms to counter gazumping, a five-day cooling-off period and compulsory vendor disclosure. The vendor disclosure is by way of the vendor making the following documents available to all prospective purchasers throughout the time that an offer can be made:
• a copy of the Crown Lease;
• a copy of the current edition of the certificate of title;
• a copy of any encumbrance that is shown on the certificate of title (for example, a restrictive covenant or an easement);
• a statement about any encumbrance that does not appear on the title;
• a copy of the lease conveyancing inquiry documents for the property;
• for a unit, a copy of the units plan, and the current edition of the certificate of title for the common property;
• the building conveyancing inquiry documents;
• the energy efficiency rating statement;
• a building inspection report from an inspection carried out not earlier than 3 months before the day the property was first advertised for sale or listed by an agent; and
• a pest inspection report.
It is an offence if a seller does not make the required documents available for inspection by a prospective buyer.

The following conditions must also be included in all contracts for the sale of residential property:
• the property is sold free of encumbrances;
• the buyer is entitled to vacant possession;
• that there are no unapproved structures, except as disclosed in the contract;
• that the buyer may not make any requisitions on the title to the property;
• that there are no unsatisfied judgements, orders or writs affecting the property; and
• that the required documents form part of the contract.
On completion of a contract for the sale of residential property, the seller is entitled to reimbursement from the buyer for the cost of obtaining a building inspection report and a pest inspection report.

If the buyer becomes aware of an error in the description of the property before completion of the contract the buyer may –
i) if the error is material, rescind the contract, or complete the contract and claim damages; and
ii) if the error is not material – complete the contract and claim damages.

Source: Tasmanian Law Reform Report

Victorian Disclosure

Vendor disclosure is required in Victoria by s 32 of the Sale of Land Act 1962. Under the Victorian legislative regime the vendor must disclose the following in a signed statement:
• for any land upon which a residence is erected, any information concerning building permits within the last 7 years given with respect to any building on the land;
• particulars of any charge imposed under any Act;
• a description of any easement, covenant or similar restriction affecting the land;
• details of any planning instruments and the zoning of the land;
• a warning to the purchaser concerning permitted user; namely, where a planning instrument prohibits the construction of a dwelling on land outside the metropolitan area;
• details of any rates and taxes charged on the land;
• particulars of any notices, order declarations, reports or recommendations of a public authority or government department or an approved proposal affecting the land of which the vendor might reasonably be expected to have knowledge; this includes notices of intention to acquire;
• basic information about the following services: gas, electricity, water, sewerage and telephone;
namely, whether the service is connected, and if so the name of the authority supplying the service. If a connected water or sewerage supply is below the standard level, particulars as to the level supplied.
Furthermore, a warning must be supplied to the effect that the purchaser should check with appropriate authorities about the availability and cost of connecting any unconnected service;
• if there is no road access to the property, a statement to this effect;
• particulars of any current land use restriction notice that affects the land due to contamination;
• a copy of the certificate of title or other evidence of title to the land;
• if the vendor is not the registered proprietor or owner, evidence of their right or power to sell; and
• if the land is subject to a subdivision, certain information must be disclosed concerning the subdivision.

Where a vendor supplies false information or fails to supply all the information required the purchaser may rescind a contract entered into on the basis of that information63 at any point before completion or becoming entitled to possession or rents and profits. However, the purchaser may not rescind the contract if the court is satisfied that the vendor has acted honestly and reasonably and ought fairly to be excused for the contravention and that the purchaser is substantially in as good a position as if the relevant disclosure had been made. The burden of proof lies with the vendor.

NSW Vendor Disclosure

Broadly speaking there are two requirements of vendor disclosure under the NSW legislative regime:

First, certain documents must be annexed to the contract of sale before the purchaser signs it:
• a certificate disclosing the planning status of the land, issued pursuant to s 149 of the Environmental Planning and Assessment Act 1979;
• a copy of the folio of the register comprising the title;
• a copy of any registered plan;
• a sewerage diagram;
• copies of all deeds, dealings and other instruments lodged or registered in the Land Tiles Office relating to: easements, profits a prendre, restrictions on the use of the land and positive covenants that affect the land; and
• additional documents that must be disclosed for Crown land and strata lots.
Failure to annex the prescribed documents does not render the contract void. Rather, the purchaser can rescind within 14 days of entry into the contract, unless the contract has been completed. This remedy is available regardless of whether the purchaser can show that the failure amounted to conduct that misled or deceived
them.

Secondly, the vendor is deemed to make a prescribed warranty to the effect that:
• except as disclosed in the contract, the land is not subject to an ‘adverse affectation’;
• the land does not contain a sewer vested in a public sewerage authority;
• the planning certificate annexed to the contract specifies the true planning status of the land; and
• there is no matter in relation to any building or structure on the land that would justify the making of any upgrading or demolition order, or if there is such a matter, a building certificate has been issued.

If this warranty is breached the purchaser may rescind the contract at any time before completion provided that the purchaser was unaware of the matter which ought to have been disclosed when the contract was made and the purchaser would not have entered into the contract if they had been aware of the matter. The purchaser loses their right to rescission if they elect to affirm the contract.

Source Tas Law Reform Paper on Vendor Disclosure p.13

Vendor Disclosure

Vendor disclosure refers to the practice of the vendor (seller) of property disclosing information about the property to the purchaser, or potential purchaser. This may be done by making a disclosure statement, giving certain undertakings (for example in the contract of sale) and/or providing certain documents.

Australian States do not have uniform leglislation for the duty of disclosure.

The current matrix would appear to be (NSW, Vic, SA and the ACT) have enacted legislation affording more protection to buyers by requiring vendors to disclose certain information about their property prior to Contract.

In other Australian jurisdictions (WA,QLD, and the NT) the standard form contract used in property sales has been developed to encourage vendor disclosure.

Tasmania is the last State that still relies on the common law principle of caveat emptor.
The principle of caveat emptor (or buyer beware) is premised on the ability of the purchaser to discover by inspection any defects in the property being purchased. In accordance with this principle, at common law, a purchaser has the right to rescind a contract for the sale of property only if:
• the vendor has failed to disclose defects with the title of the property; and
• those defects are not discoverable by a normal inspection of the property.

This state of affairs reminds me to pull out my old copy of Voumard and debate the distinctions between a a defect in title that would allow rescission, as against something that only goes to a defect in the quality of the title (and therefore does not permit the purchaser to rescind the contract)

Summary: The current law in Tasmania requires vendors of residential property to disclose little information to purchasers about the property. The common law principle of caveat emptor has the effect of requiring only that matters constituting a defect in title be disclosed – matters affecting the quality of the title need not be disclosed. Case law demonstrates that the distinction between these two categories is not always obvious.

Source Tasmania Law Reform Institute Final Report No 5 Sep 2004 on Vendor Disclosure

NECS - First Meeting of National Committee

November 2005

As the next step in establishing the National Governance Arrangements, a National Steering Committee has been formed and held its inaugural meeting in Sydney late last month.
The Committee is made up of government, industry and profession representatives and its task is to arrive at the policy and strategy decisions necessary to make electronic conveyancing a reality across Australia.
Present at the first meeting were:

• Michael Ockwell, Registrar-General, representing the ACT Department of Justice and Community Safety
  
• Des Mooney, Deputy Director General, representing the NSW Department of Lands
  
• Greg Shanahan, Deputy CEO, representing the NT Department of Justice
  
• Neil Lawson, Executive Director, representing the Queensland Department of Natural Resources and Mines
  
• Jeff Reeve, Manager Finance, representing the Tasmania Department of Primary Industries, Water & Environment
  
• Genevieve Overell, Deputy Secretary, representing the Victoria Department of Sustainability and Environment
  
• Grahame Searle, Chief Executive, representing the WA Department of Land Information
  
• Nikki Kempson, NSW Office of State Revenue
  
• Paul Broderick, CEO Victoria State Revenue Office
  
• Bruce Treloar, Westpac Banking Corporation, nominated by the Australian Bankers’ Association
  
• Sean Cash, Chief Operating Officer, ANZ Banking Group, nominated by the Australian Bankers’ Association
  
• Brian Parker, Chief Operations Officer, Espreon, nominated by the Information Brokers.
  
• John Corcoran, Member, Law Council of Australia
  
• John McIntyre, President, Law Society of NSW
  
• Jill Ludwell, CEO, Victorian Division Australian Institute of Conveyancers
  

You can make representations to the Committee via the National Office info@necs.gov.au or through Lands ecnsw@lands.nsw.gov.au
Source: Electronic Conveyancing in NSW - Newsletter No. 12

247digital - typogenerator

Electronic Transactions Act - British Columbia

Electronic Transactions Act BC

Section 2 deals with Application and Exceptions

2(4) This Act does not apply to

1. wills,
   
2. trusts created by wills,
   
3. powers of attorney, to the extent that they concern the financial affairs or personal care of an individual,
   
4. documents that create or transfer interests in land and that require registration to be effective against third parties
   

Presumably you can exchange contracts for the sale of land electronically but not sign a Transfer electronically under the Act. British Columbia has electronic transfers under their Land Registry system so that must be specifically dealt with under that legislation.

free plug for the 3 Netconnect data card

Mobile computing is becoming more common. Personally I find the service good but at times frustrating when in the middle of Melbourne CBD it cant find the network. A backup strategy is to subscribe to wireless hotspot providers.

worlds first wireless digital conveyancing file

Despite the rest of the world still struggling with preparing paper contracts and vendor statements, Hayton Kosky has created the first digital conveyancing file, using a wireless laptop with a 3 NetConnect data card, for the sale of client property at 3/27 Victor Road Bentleigh East Victoria. The property profile was created at 12.32p 09-Dec-2005. Title searches were ordered via GXS at 12.37 09-Dec-05. The vendor client who resides in Queensland and the estate agent were emailed so they can track the progress of the sales documentation through to completion.



The sales documentation will be completed next week on receipt of the balance of the property certificates. This is as close as you can get to a paperless file. This file also demonstrates that you can perform all these functions remotely and without using any desktop software.

Apologies for the crap foto

Getting combat ready for the digital office

From early 2006 the Digital Conveyancing User Group will be presenting a monthly series of e-forums and online discussion groups on becoming combat ready for the digital office and electronic / digital conveyancing.

Sample topics covered

• Scanning & Scanners
  
• Digital faxes – fax to email
  
• Transmitting everything in PDF
  
• Standardisation of Real Estate Contracts
  
• Digital Contracts & Vendor Statements
  
• Hosting a web site
  
• E-marketing
  
• Building Business through networking
  
• National Electronic Conveyancing System
  
• Electronic Conveyancing Systems in NZ and Canada
  
• Digital Archives
  

Don’t miss out.

Register now - membership form

Homes sales still falling - theage.com.au

Homes sales still falling - theage.com.au

RESIDENTIAL property transactions in Melbourne will show a decline for the fifth consecutive year, with sales to the end of November down more than 40,000 from the peak in 2001.

Property analyst Residex said residential sales so far this year totalled 54,799 ? and with only a month to go the number is unlikely to eclipse last year's 66,339 transactions.

Sales of units showed this year's biggest decline ? 16,050 compared with 20,583 last year. The figure is well short of the high in 2001 of 40,041.

So far this year, 38,749 homes have sold, compared with 45,756 for all of last year. Residential sales in 2001 totalled 98,269.

At the peak of the property market in 2003, the value of dwellings changing hands was a record $30.4 billion. The figure to the end of November is $23.4 billion and, according to Residex, the total for the year is likely to be down on last year's $25.4 billion of sales.

The figures are $10 billion lower than the data from the valuer-general because the Residex figures do not include all the Mornington Peninsula and outer areas of Melbourne.

While the low volume of sales this year has underpinned Melbourne's property prices, it has also resulted in a continued contraction in the real estate industry. The Real Estate Institute of Victoria has reported that 65 member offices closed this year, up on the 55 offices that ceased trading last year.

Despite the decline in the volume of sales, more vendors opted for auctions as a selling method, with dwellings sold under the hammer rising from 19,424 in 2004 to an estimated 21,118 this year.

The yearly clearance rate also picked up, from 56.8 per cent last year to an estimated 65.5 per cent this year, indicating growing strength in the inner-city market, where auctions tend to predominate.

Melbourne's median house price peaked at $380,000 in the December quarter of 2003. In the September quarter this year it was $360,000.

Electronic Conveyancing - UK

On 13 October 2003, the Land Registration Act 2002 (2002 Act) and Land Registration Rules 2003 (2003 Rules) came into force. The 2002 Act and 2003 Rules completely replace the statutory framework for land registration set out in the Land Registration Act 1925. The 2002 Act and 2003 Rules provide the cornerstone for electronic conveyancing by creating a legal framework for transferring and creating interests in registered land by electronic means. HM Land Registry (HMLR) is responsible for developing an electronic conveyancing system. Under the system it will be possible to execute formal documents electronically via a secure electronic communications network. Execution and registration of documents will be simultaneous and conveyancers will initiate the process. HMLR will control access to the network and what changes can be made to the register. HMLR hopes to create a fully functioning electronic system by 2007.

HM - Land Registry e-conveyancing site

Most important legal tech trend

Transmitting everything in PDF.

Erica Greathouse, IT Director, Castle, Cox & Nicholson based in Los Angeles. We represent and assist businesses, institutions and individuals in the real estate, finance and construction industries. We have 130 lawyers in Los Angeles, Irvine, Calif., and San Francisco. We employ about 280 people, with an IT staff of eight.

Law Technology News
December 1, 2005

not on a deadline

Push for e-transfers

EVERY day, an army of secretaries and lawyers dashes across the cities of Australia carrying documents and cheques.

Their task, which has changed little in the past century, is to carry out the important, but mundane work involved in changing the ownership of real estate.
But if Simon Libbis has his way, all those clerks, secretaries, conveyancers and lawyers will soon be doing things very differently.

Mr Libbis is the man at the centre of a joint project backed by business, the states, lawyers and conveyancers that is attempting to take conveyancing online.

Australian - 2 Dec 05 - Chris Merritt

Good story - but it ain't happening for 4 years

online financial property settlement system

Building an online property settlement system

SFE Austraclear is the central settlement facilitator between Land Exchange, Resrve Bank and financial institutions (FI).

Briefly:

SFE Austraclear receives the financial settlment data related to each Electronic Lodgement File (ELF) marked as ready for settlement. This is sent in batches by Land Exchange.

After validating each file (including the sender, file contents and associated digital certificates), Austraclear repackage it and calculate the aggregate position of each FI involved in the batch.

Once this is complete, Austraclear will send the financial details of each FI's aggregate position to the bank responsible for the ultimate settlement. Simultaneously they send the aggregate position batch of all FI's to the RBA for processing. Once authorised by the RBA, Austraclear advises Land Exchange that final and irrevocable settlement of the ELF's contained in the batch has been achieved and that the transfers can occur.

At this point RBA confirms settlement, the banks are able to post the cleared funds across their various customer and internal settlement bank accounts.

A full description is contained in the December 05 newsletter of Land Exchange