An Essay on The Value of Privacy by Bruce Schneier

Last month, revelation of yet another NSA surveillance effort against the American people rekindled the privacy debate. Those in favor of these programs have trotted out the same rhetorical question we hear every time privacy advocates oppose ID checks, video cameras, massive databases, data mining, and other wholesale surveillance measures: "If you aren't doing anything wrong, what do you have to hide?"

Some clever answers: "If I'm not doing anything wrong, then you have no cause to watch me." "Because the government gets to define what's wrong, and they keep changing the definition." "Because you might do something wrong with my information." My problem with quips like these -- as right as they are -- is that they accept the premise that privacy is about hiding a wrong. It's not. Privacy is an inherent human right, and a requirement for maintaining the human condition with dignity and respect.

Two proverbs say it best: "Quis custodiet ipsos custodes?" ("Who watches the watchers?") and "Absolute power corrupts absolutely."

Cardinal Richelieu understood the value of surveillance when he famously said, "If one would give me six lines written by the hand of the most honest man, I would find something in them to have him hanged." Watch someone long enough, and you'll find something to arrest -- or just blackmail -- him with. Privacy is important because without it, surveillance information will be abused: to peep, to sell to marketers, and to spy on political enemies -- whoever they happen to be at the time.

Privacy protects us from abuses by those in power, even if we're doing nothing wrong at the time of surveillance.

We do nothing wrong when we make love or go to the bathroom. We are not deliberately hiding anything when we seek out private places for reflection or conversation. We keep private journals, sing in the privacy of the shower, and write letters to secret lovers and then burn them. Privacy is a basic human need.

A future in which privacy would face constant assault was so alien to the framers of the Constitution that it never occurred to them to call out privacy as an explicit right. Privacy was inherent to the nobility of their being and their cause. Of course being watched in your own home was unreasonable. Watching at all was an act so unseemly as to be inconceivable among gentlemen in their day. You watched convicted criminals, not free citizens. You ruled your own home. It's intrinsic to the concept of liberty.

For if we are observed in all matters, we are constantly under threat of correction, judgment, criticism, even plagiarism of our own uniqueness. We become children, fettered under watchful eyes, constantly fearful that -- either now or in the uncertain future -- patterns we leave behind will be brought back to implicate us, by whatever authority has now become focused upon our once-private and innocent acts. We lose our individuality, because everything we do is observable and recordable.

How many of us have paused during conversations in the past four-and-a-half years, suddenly aware that we might be eavesdropped on? Probably it was a phone conversation, although maybe it was an e-mail or instant message exchange or a conversation in a public place. Maybe the topic was terrorism, or politics, or Islam. We stop suddenly, momentarily afraid that our words might be taken out of context, then we laugh at our paranoia and go on. But our demeanor has changed, and our words are subtly altered.

This is the loss of freedom we face when our privacy is taken from us. This was life in the former East Germany, or life in Saddam Hussein's Iraq. And it's our future as we allow an ever-intrusive eye into our personal, private lives.

Too many wrongly characterize the debate as "security versus privacy." The real choice is liberty versus control. Tyranny, whether it arises under threat of foreign physical attack or under constant domestic authoritative scrutiny, is still tyranny. Liberty requires security without intrusion, security plus privacy. Widespread police surveillance is the very definition of a police state. And that's why we should champion privacy even when we have nothing to hide.

http://www.schneier.com

Bruce Schneier is a pre-eminent expert on matters of security and is a strident critic of government's mindless reactive responses to perceived security threats

Home Information Packs - UK Vendor Disclosure

An excellent article on the introduction of the Home Information Pack (HIP) for the sale of property in England & Wales as from 1 July 2007. The article was published on thisismoney.co.uk.

The guts of the HIP that the Vendor must supply is -
The pack will include the following documents, most of which are currently provided later in the sale:

• terms of sale
• evidence of title
• replies to standard preliminary enquiries made on behalf of buyers
• copies of any planning, listed building and building regulations consents and approvals
• for new properties, copies of warranties and guarantees
• any guarantees for work carried out on the property
• replies to local searches
• a home condition report based on a professional survey of the property, including an energy efficiency assessment.

Also, for leasehold properties:
• a copy of the lease
• most recent service charge accounts and receipts
• building insurance policy details and payment receipts
• regulations made by the landlord or management company
• memorandum and articles of the landlord or management company

The article answered many other questions
Will failure to provide a home information pack be a criminal offence?
By how much will the new system speed up transactions?
Will the packs add to the cost of buying and selling, and who will pay?
What about sellers who cannot afford the up-front costs?
What are the benefits of the home information pack?
Won't preparing the pack simply shift delays to the beginning of the process?
Isn't it unfair to put all this extra responsibility on sellers?
Who will actually compile the home information pack?
Will anyone be exempt?
What will the home condition report cover?
Will the home condition report include a valuation?
What will the home condition report cost?
But will buyers trust a report commissioned by the seller?
Will mortgage lenders trust the home condition report?
Won't home condition reports become out of date and have to be repeated?
Will there be enough home inspectors available to do the job?
What about new homes?
The changes will not prevent gazumping, why not just ban it?
Why not adopt the Scottish system, where an offer is binding once accepted?

THe second last point is one of the most interesting ones, tho not directly relating to the HIP, is why didn't the changes end gazumping? I haven't got my head around the gazumping issue in that seems there is no certainty until settlement is concluded.

Vendors will now have to pay a significant upfront cost in preparing the HIP because of the provision of the home condition report.

Another interesting quesiton is who will have to actually compile the report. According to the answer is the person marketing the property will be responsible for ensuring that the pack is available. This would normally be the seller's estate agent but could be a builder, property developer, solicitor, or the sellers if they are not using an estate agent. There is no legal requirement the HIP has to be prepared by a lawyer.

The article included the following paragraph which has relevance to 247legal and NECS
"The Office of The Deputy Prime Minister (ODPM) is responsible for the new regime. It says Hips will ensure important information is provided up front at the very start, and electronic conveyancing will speed up the transaction once a sale has been agreed. 'Taken together, both of these measures will help create a faster and more efficient home buying and selling system.'" That's been my argument for some time. Interesting.

Identity Verifications in Electronic Conveyancing

In the current paper- based process of conveyancing, legal practitioners, licensed conveyancers and financial institution officers prepare instruments and in most cases have their clients sign the documents in front of a witness who also signs. While practitioners, conveyancers and banks have a duty to ensure that the person they are dealing with is who they say they are, they also rely on the person to certify the correctness of the information in the dealing by signing it in front of a witness.

Replacing Traditional Signatures

In electronic conveyancing, electronic instruments and dealings will be digitally signed by legal practitioners, licensed conveyancers and authorised officers of banks and other lenders. They will certify the correctness of the information as well as having carried out and documented a prescribed process to verify the identity of the proprietor or other transacting party they are representing. In the absence of a personal signature of the proprietor or other transacting party on the instrument, the Land Registry will entirely rely on the practitioner’s certification in changing the details recorded on its Torrens Register.


No Need for Signature Witnessing

In electronic conveyancing it will not be necessary for the digital signatures of practitioners and authorised officers of financial institutions to have their signatures on instruments witnessed. This is because practitioners and authorised officers have their identity independently verified as part of the process of being issued with a digital signature.

Identity Verification Procedure

The identity verification process that practitioners will be required to follow is expected to be prescribed in regulations. The process will be consistent with the obligations placed on financial institutions by the Commonwealth’s Financial Transaction Reports Act 1988. This Act prescribes the 100-point identity verification procedure currently widely used by banks and other lenders. If and when this legislation is replaced under the Commonwealth’s anti-money laundering and counter terrorism financing proposals, the new procedure replacing the 100-point check will become the basis for identity verification in electronic conveyancing.

Special Arrangements for Long-Standing and Remote Clients

To supplement the procedures used by financial institutions in verifying the identity of their clients, special arrangements are intended for practitioners to vouch for the identity of long-standing clients and to rely on the certifications of other practitioners when representing clients from remote areas. These arrangements will balance the need for closer attention to identity verification with the practicalities of representing clients in certain circumstances.

Certifying Compliance with a Prescribed Procedure

Practitioners certifying having properly carried out and documented a prescribed procedure to verify the identity of a client are certifying compliance with the procedure only. They are not certifying the client’s identity or in any other way “guaranteeing” that the person is who they say they are. Practitioners able to adequately demonstrate having complied with the prescribed procedure, will be able to confidently defend against their negligence having contributed to a loss from their client’s identity fraud.

Identity Document Verification

The Commonwealth Government is currently testing a new service that will enable practitioners to verify the authenticity of documents presented to them as proofs of their client’s identity. The service, to be available over the Internet, will allow practitioners to be confident that a birth certificate, passport or driver’s license, for example, has been issued by the relevant State or Commonwealth agency in the same name and with the same particulars as a document presented to them by their client as a proof of identity. While this new service when it becomes generally available will not prove that any document is genuine, it will allow greater confidence to be placed in the document because its details match those on record with the relevant government agency.

National Consistency

It will be of assistance to practitioners dealing with clients in more than one jurisdiction for the required identity verification procedure in each State and Territory to be the same. This issue is expected to arise in the national consultation on electronic conveyancing issues due to commence shortly.

Source: Electronic Conveyancing in NSW - Newsletter No. 17

Online vs Offline 3:1

A recent posting declared the death of residential leasing listings in the Age Classifieds.

I figure well is the same happening to real estate listings for properties for sale? It is but it's not over yet.

A quick comparison for properties listed for postcodes 3186 & 3187 (Brighton & Brighton East) for Saturday June 24.

The Age - 54 listings
Domain* - 162 listings

That's exactly a 3-1 ratio

A quick comparison of the 3 main agents in the area

Hodges. 9 in the Age and 37 on the web - ratio of 4-1
Buxtons. 15 in the Age and and 42 on the web - ratio 3-1
Hocking. 10 in the Age and and 32 on the web - ratio of 3-1

Conclusion. The current ratio is 3-1 online digital vs offline print. For every property listed for sale in The Age there are still 2 properties for sale not listed in the Age. That's quite significant. Admittedly the sample is quite small, the trend is not.

I predict that when the portals add Google type mapping the ratios will increase by a significant factor again as the buyers will able to zone into the precise areas they want to buy. Mapping is not something print can offer.


*realestate.com.au was roughly the same as Domain

The Transfer of Land - Missing in Action

The more you think about it, the more I, we you cannot wait for the commencement of Electronic Conveyancing. I would figure at least three times this year, the Transfer of Land document has been "lost" prior to settlement. Somewhere, somehow our client or the other side's client has not returned the executed Transfer in readiness for settlement. So what do we all do in the collaborative spirit of making settlement happen? If we are acting for the Purchaser, we email our client an Annexure page (A1) and have them print, sign and courier or express post the A1 back to us. The solicitor for the Vendor does the same with the actual Transfer and the two documents are married up at the actual settlement.

I am physically over it. I dont get involved. My staff know the routine and the job gets done. Its no-one's fault. The system is the problem and the mortgage and legal industry need to work hard to change, to embrace innovation and to change. Forget the excuses.

The securities industry eliminated this farce 10 years ago.

Web 2.0 Innovation

Web 2.0 - The Fin Review asks what it means?

"Web 2.0 portends a sea change on the internet. Web 2.0 sites are not online places to visit so much as services"

Flickr - photo sharing
Wikipedia - collaborative online encyclopedia
MySpace
Google - are just a few examples

The list goes on - but all such sites demand participation and interaction.

As the Fin concludes Web 2.0's impact has yet to be felt with business.

Digital Conveyancing & Vendor Disclosure - Digital Mortgages - Electronic Conveyancing & Settlements. Web 2.0 will transform the property mortgage and conveyancing services to an online collaborative process where the customer wins so do the legal & financial sectors. 247legal is just the first pioneer for Web 2.0.

Westpac - The Black Hole of Calcutta

Something not so amusing - but you have to laugh to maintain sanity. This time its Westpac's turn yet again. A simple request for mortgage payout figures elicits not a single response from Westpac Adelaides mortgage settlements area after SIX FAXED REQUESTS plUS FoLLOW uP pHONE cALLS.

Is this section run by Westpac or EDS? ITS a JOKE. and nOT funny. In such cases we now refer clients to the Banking Ombudsman. And I call upon every Lawyer and Conveyancer to do the same. At least in one case our client received compensation.

If the message is not clear - your systems are understaffed, non accountable and broken.

view the offending
Copy Faxed Instructions to Westpac sent on the following days

1. 26 May 2006


2. 3 June 2006


3. 5 June 2006


4. 9 June 2006


5. 16 June 2006


6. 19 June 2006

Seriously, if you want solutions and to provide world class service to your clients, consult the writer at 247legal.com.au for technical consulting services and digital conveyancing and mortgage solutions.

This storey is not dissimilar to the AOL / Vincent Ferrari - "I just want to cancel my account." - 21 times later

Serviced Apartments – a 5 year review

The real test for how a service apartment investment is performing comes around once every 5 years. That’s generally how long the term of the lease is before the operator or tenant exercises its option to renew and the rent review to market takes place.

The general framework for a Serviced Apartment Lease has the following facets:

1. The initial rent was set at an attractive yield of say 6.5% of the Sale Price


2. Annual rent increases were fixed, say 3% per annum for the term of the Lease, usually 5 years


3. The Tenant pays recurring body corporate fees


4. The Landlord paid rates and expenses of a capital nature such as sinking fund contributions


5. The Tenant has multiple options, usually 4 x 5 years


6. The Landlord will be up for refurbishment costs, such as re-carpeting and painting to maintain the standards for a serviced apartment operation. Factor in $10 to $15K every 5 – 10 years

There are certainly attractions to the long term investor in the serviced apartment model as presented above which is why they have sold very well to the investor who is attracted to the passive investment model.

Cracks however have started to appear in the model which should be of great concern to the Service Apartment Franchisors if they want to protect the industry’s reputation.

The biggest crack is the 5 year rent review to market and Landlords are seeing drastic rent reductions. One example is a Sydney Serviced Apartment Operator who has put to his Landlords rent reductions of between 25 – 47%. When a valuer is appointed and makes a final determination is yet to be seen. This is the worst example I have heard so far but it is not an isolated example of operators seeking wholesale rent reductions.

Many landlords will be looking for the exit door but what effect does rent reductions have on the re-sale value of their investment is obvious. Not only that, the whole industry is put at risk when the industry's reputation is damaged by precedent that is now being set by tenant operators.

Wikipedia & Conveyancing

Wikipedia is the online encyclopedia that "anyone can edit". Wikipedia has become a symbol of the potential of the Web. Wikipedia has its stumbles and sometimes a revert war can erupt - changes back and forth between a couple of contested contributors such as the Christina Aguilera entry which was frozen for a week after fans of the singer fought back against one user's efforts to streamline it.

The bulk of the writing and editing on Wikipedia is done by a geographically diffuse group of 1,000 or so regulars, many of whom are administrators on the site.

"A lot of people think of Wikipedia as being 10 million people, each adding one sentence," Jimmy Wales, Wikipedia's founder said. "But really the vast majority of work is done by this small core community."

The core success of Wikipedia can be attributed to the simple concept of collaboration and much less on individual contribution.

The same goes for the conveyancing process. Today in the offline paper world which conveyancing and mortgage processing is, the process relies on collaboration of multiple parties each serving the vendor, the buyer and the mortgagees. Electronic and Digital Conveyancing will simply evolve into an online digital state based on the simple concept of collaboration.

Certificates of Title in Electronic Conveyancing

What happens to Certificates of Title when electronic conveyancing is introduced?

This is one of the key issues to be resolved in developing the detailed arrangements for electronic conveyancing in NSW.

In the existing arrangements for conveying a property, the Certificate of Title (or CT) plays an important role in identifying the person entitled to deal with the property – either the proprietor (if the property is unencumbered) or a lender (if the property is mortgaged) – and in retaining control over the registration of subsequent interests that may affect the lender’s security. The CT is brought to the settlement by either the vendor or a discharging lender and handed to the purchaser or a new lender together with the instruments necessary to transfer ownership and, if necessary, discharge an existing mortgage and register a new mortgage. While holding the CT after settlement, the purchaser or new lender can be confident no other transfer or mortgage will be registered before they lodge their instruments for registration.

In an electronic conveyancing environment the role of the CT must change. With settlements taking place electronically without the physical meetings held today, a CT cannot be handed over to a purchaser or new lender in the same way. What happens to the CT in the future will depend upon what is agreed among all key stakeholders on three roles the CT plays in the current paper-based conveyancing system. These roles are:

1. as an indication to practitioners that their client is entitled to deal with the property


2. as an indication to purchasers and lenders at settlement that they are dealing with the person or business entitled to deal with the property


3. as an assurance to purchasers and lenders after settlement that another purchaser or lender cannot register a competing interest in the property ahead of them. The CT gives purchasers and lenders time to lodge their transfers and mortgages without fear of being beaten to the Register by another purchaser or lender.

There are a number of ways these roles can be maintained in an electronic conveyancing environment. Over coming months this will be one of the issues widely discussed in National Consultation Forums about to be set up by the National Electronic Conveyancing Office and the most desirable outcome will be a common arrangement in all States and Territories.

One approach could be for:

• a CT to be issued only for unencumbered properties and not issued where the property is mortgaged. Persons dealing with the owner of an unencumbered property would still need to ensure that they receive a valid CT at or prior to settlement. Practitioners and authorised officers of lenders would certify to holding the CT and retain it with other documents supporting the transaction.


• where a CT has not been issued, the controlling party (the party having the right to deal, usually a lender) would be clearly indicated on the Torrens Register for the property and would appear on all public searches of that title. This would ensure that anyone searching a title record can readily identify who is entitled to deal in the property and whether or not a current CT has been issued.


• where a transaction involves land for which a CT has not been issued, the controlling party would be able to transfer the right to deal electronically. This may require the inclusion of a new document type in electronic conveyancing.

The future arrangements for the CT need to be thoroughly explored to ensure that whatever decisions are made the current integrity of the conveyancing process is preserved and electronic conveyancing is convenient and easy to use.

Source: Electronic Conveyancing in NSW #16
Please Note - The above is provided with a view to elicit comment and generate discussion. It is not intended to prescribe Lands position in respect to the manner in which the issue(s) discussed will be managed in an electronic conveyancing environment

My personal view - I believe we need to embrace a system of No CT. It is up to us and Government to design and devise a system with No CT with the checks and balances as part of the system to reduce the incidence of fraud. How much fraud exists under today's current paper system and in the past? How much fraud has occured under CHESS? Should a compensation fund be created? Should the system be underwritten by Title Insurance? This will be the hot topic going forward. Brett Hayton

Digital vs Print - and the winner is .....

From next week Guardian journalists are to embark on a "landmark" change in the way they work by publishing all news stories on the newspaper's website up to 24 hours before they come out in print.

The change reflects the fact that while the print edition of The Guardian sells 374,580 copies a day, Guardian Unlimited has 12.9 million "unique users" a month, mostly from outside the UK.

Guardian editor Alan Rusbridger told Press Gazette: "It seems to me that the move to a situation in which the digital edition becomes as important, if not more important, than the print edition — some would argue that's already happened at The Guardian in terms of our global presence — seems to me to be inevitable.

"The advertising is already going that way. I think it's not viable for newspapers to carry on with a once-a-day print deadline because that's the way that we've done it for 200 years.

"If we don't wake up and realise we are competing with people on a daily basis who are beating us by 12, 18 and 24 hours on stories, then we are heading to irrelevance."

Digital vs Print - The only survivor in the digital vs print world will be books for the foreseeable future. As for everything else ...

Hostility to Change

Monash Law Faculty recently held a public forum to encourage debate amongst lawyers about Electronic Conveyancing. When it came to question time, why is it most contributions are innately negative and sometimes positively so off the mark I wonder why they bothered to turn up. Surely they are not representative of the majority. Perhaps such attitudes, beliefs, fears are widely held. It wouldn't surprise me in the least.

Example 1. Settlement has just occured. Is it possible to undo settlement to put the parties back into their position pre-settlement? Simple answer is No. Faaaaack. In my 20 odd years I cant recall undoing any settlement. As soon as I have bank cheque in hand - I'm out of there.

Example 2. I have a cash buyer. Now the client will have to pay stamp duty at settlement and not delay for 3 months. Answer - whilst NECS is not compulsory dont use NECS - stick to the paper, physical settlement routine. Second the problem with stamp duty is not the timing of payment its the fact that bracket creep has put everyone in the unfortunate position of paying 5%

Unfortunately the legal profession is conservative and slow to change plus the voice of the naysayers are often too loud. The good news is they will be the ones left behind and wont know what happened until its too late to change. Gen Y will just takeover.

Gen Y - they run fast & play hard

Within the next five years GenY will make up 40% of the workforce, today it is 20%.

The common attributes of Gen Y are they are agressive, they're hungry to suceed and they want time away from the office. To use a sporting analogy, they run fast and they run straight. They like to play hard. (dont we all)

In the workplace, they dont want to push paper. lets face it they are technology savvy and they dont care how things used to be done.

The Legal industry and specifically the conveyancing and mortgage industry should be concerned with this generational shift. If the industry does not change, ie get smarter, expect attrition. Gen Y just wont tolerate the paper crap and the inefficiencies of an offline paper world. (didn't the securities industry change over years ago?)

But for those that do adopt and evolve they can expect to reap the rewards and the profits. My previous post concerned incremental changes. Not good enough. We need big bang changes.

credit for quotes above - Business Sunday

"big bang" changes or upgrade incrementally?

NECS is an example of big bang changes. It is reported by AFR that Telstra executives had plumped for the riskier of two choices by pushing ahead with a "big bang" replacement of back-office computing operations. A $1 billion replacement of the spaghetti-like tangle of software and hardware that runs the carriers business is a key plank in the Telstra transformation strategy.

The carrier has 1200 business and operational support systems, and the move is to cut 900 systems in three years. As pointed out its not a technical issue, it's about return on capital. Its all about ROI and operational savings.

The article points out the banking sector has spent hundreds of millions of dollars over the years to build humungus new systems - and $600M later, they have no ROI. Now I am not sure where the journalist Emma Connors comes up with these numbers. Though I do remember reporting over the years banks missing the mark on technology investments.

Back to NECS - they too will ending up investing substantially in a whole new business model for settlements and lodgements. Their ROI will come but over many years, certainly not short term. What NECS is doing is big bang but it is also incremental given over the past 25 years they have been creating a land title database and imaging of plans and encumbrances. The next steps Land Registry are taking are two fold. One is improving the processes for lodging and registering Plans of Subdivision. I understand that trials are continuing with surveyors and councils. I would be interested to hear feedback on this. I believe the Eureka Tower was one of the first to be lodged electronically. The other step is electronic lodgment. Trials with banks are about to begin, soon.

Back to the banks - now I believe the banks need to overhaul their mortgage and loan processing, not with incremental changes but with a big bang overhaul. Don't just look to NECS because they aren't about solving this one, they are about lodgment. In the past you have looked at outsourcing, but really this has just resulted in more of the same, more or less. Digital loan and mortgage documentation and processing is the answer. Turn loans and mortgages into digital instruments together with digital processing and there you have not just innovation you have a huge ROI on technical investment.

EC NSW - Some statistics on dealings

What Dealing Types will be Possible in Electronic Conveyancing?

Not all of the existing 74 registrable dealing and instrument types in use in NSW will be available in electronic conveyancing. Which ones are chosen for implementation in NSW will depend upon how often they are used, how suited they are to an electronic format, and whether any special circumstances warrant their inclusion or exclusion. Consultation with industry will be necessary before final decisions are made.

The most likely ones

The principal objective of electronic conveyancing is to accommodate the most common dealing types – those required in the sale of a private dwelling, for example. These transactions typically involve a discharge of mortgage, a transfer and a new mortgage. These three dealing types alone account for 86% of all documents lodged in NSW at present and a majority of them are straightforward and therefore suited to electronic conveyancing.

Others that will be considered

After discharges, transfers and mortgages, the next most common instrument types are: caveats, including withdrawals (2.3%), leases (2%), transmissions (1.4%), name changes (1.3%) and notices of death (1.1%). Which of these are made available in electronic conveyancing will be the subject of detailed analysis and consultation in the months ahead. Caveats including withdrawals, transmissions, name changes and notices of death are most likely to facilitate maximum use of electronic conveyancing.
Some Issues Involved

Implementing electronic conveyancing will also require some changes to the way existing dealing types are used.

Transfers are likely to be made up of two separate but counterpart components, where the practitioner acting for the vendor completes one part and the practitioner acting for the purchaser completes the other. The electronic conveyancing system will ensure the information contained in both counterparts is consistent and the counterparts are linked. Mortgages are also likely to be made up of two separate but counterpart components, one for the purchaser’s practitioner to complete and one for the lender’s representative to complete. Mortgages and their associated memoranda will also need to be standardised and Notice of Sale data integrated with relevant dealings.

Each dealing type included in electronic conveyancing will be made up of standardised and fixed operative words interspersed with data fields. A unique dealing type identifier will be used to insert the standardised operative words among the data fields to produce the instrument for uniform screen display or printing during preparation, during examination after lodgment, or as the result of a public search after registration. The specific requirements for electronic instruments are likely to be prescribed in legislation in an equivalent manner to the existing requirements for paper instruments.

Source Electronic Conveyancing in NSW - Newsletter No. 15

• A lot of the above is not new news. What is news is the introduction to the concept of Counterparts and execution by practitioners. Transfers I can understand will be signed off by Practitioners for the Vendor and Purchaser. But why the concept of Counterparts? I would have thought the obvious is a common data set that each Practitioner approves and signs off. Interesting that EC-NSW throws this tidbit out about Counterparts but no explanatory memoranda. Come on guys, why two counterparts?


• Also new news is the concept of "Mortgages are also likely to be made up of two separate but counterpart components". Now here is something I dont think Practitioners will feel all that comfortable with and that is executing Mortgage Counterparts on behalf of Mortgagor clients. And is it all that practical? There are better solutions than this and they dont involve Legal Practitioners executing mortgages on behalf of clients. Forget Practitioners. Borrowers and Mortgagors should deal direct with the banks. There is a real solution which involves secure electronic files and the client signs a document referencing the unique electronic file. Not hard really.

Online vs Offline Classified Advertising

NYT - IN the matchup between the print and online versions of newspapers, signs of the Internet's ascendancy are growing stronger. As Colby Atwood, a newspaper analyst and a vice president at Borrell Associates, put it, "The tail is beginning to wag the dog."
According to estimates released on Friday by the Newspaper Association of America, newspaper print ad spending in the first three months of 2006 increased only 0.3 percent, to $10.5 billion, over the corresponding period last year. At the same time, spending for online advertising surged 35 percent.
"I think the handwriting is kind of on the wall that there is a large migration to the Web," Mr. Atwood said. "Increasing amounts of revenue and focus should be on the online properties. This is a transition that's taking place over several years here. It's not happening overnight, but it's definitely happening."
The numbers are still small compared with print: the first quarter of 2006 produced $613 million in online advertising, up from $454 million in the year-ago period. But it is the eighth consecutive quarter of growth for online ads, according to the association.

Work Life Balance

Current conveyancing practices lock us into the rigid 9-5 work ethic and clocking up overtime to meet deadlines. Current conveyancing practices also dictate that the work has to be done at the office where you have access to the file, the fax and the copier. Even if you wanted to work from home what can you do? You could take a file or two home with you and make a couple of phone calls. There just aren’t many options that a conveyancer can avail themselves if they want to have some flexibility.

Yet as reported by the FinReview, a quarter of the workforce is doing some work from home but it’s chiefly because people are trying to catch up on what they failed to finish at the office. All too often conveyancers are staying back after hours to complete auction documentation, collating and photocopying voluminous documentation for the upcoming auction

The ability to work in the office and from a home office would suit many people.

Technology is the answer. Online digital solutions will facilitate productivity by shifting the focus from offline paper to an online digital alternative. It will facilitate flexibility. Conveyancers will be able to work at the office and at home. The majority of conveyancers are women. I don’t think that is disputed. Trying to achieve the work/life balance is the holy grail. Part-time work, job sharing and flexible work place options are very important to raising kids and the demands placed on all of us outside work. Don’t get me wrong, working in the office amongst colleagues and with supervision and support is still the primary option.

Conveyancing – online, offline, digital – what goes?

For a start law firms just need to start waking up and making a concerted effort to keep up and start focusing on internal work practices. Digital and electronic conveyancing solutions are part of it. But the firm needs to focus on simple available solutions and start using them. Shun the fax. Shun the photocopier. Think, document scanning, PDF. email

Why? You are simply not providing the optimum work environment for your staff.

I want to drop my kids off at school a couple of days each week. Well I can if I can do some work from home before 8.30.

Sale with the Candle

In 1962, Michel* had bought his doll's house restaurant at what the French call vente a la chandelle, a colourful but nerve wracking style of property auction dating all the way back to fifteenth century. The auctioneer opens bids by ceremoniously lighting two candles - or rather tallow wicks - one slightly longer than the other. The bidding follows on briskly, because the wicks last no longer than fifteen or thirty seconds. The first candle goes out (the tallow's greasy smoke the indisputable sign of its extinction), and then the second, giving bidders one, last chance, because at this moment the auctioneer lights the third and final wick, and the suspense mounts as the bids fly. The last one to shout or to make a sign before the third candle winks out or the black smoke rises is declared the winner. The Pot eu Feu, situated on an impase next to some old factories in an undesirable corner of Asnieres, wasn't exactly a prime piece of real estate. Michel got it with a princely bid of 18,000 francs - about $3,600 at the time.

For the third and last time ........

*Michel Guerard is regarded as one of the founders of what was called in the years 1960 and 1970 the movement "the new kitchen" the forefront of nouvelle cuisine

Extract from The Perfectionist by Rudolph Chelminski published 2005.
What could possibly possess a three-star French chef, a master of his difficult trade in a country that reveres cuisine, to commit suicide in 2003, just after wrapping up the daily lunch service?

Google Maps Australia & NZ

Well if you haven't heard - you will - and the race has started. Google mapping will take real estate portals to a whole new level. It will be interesting to watch.

Google Maps Australia My understanding is Google Maps Australia is in its embryonic stage of release.

Here's a simple example by creating a link for a location map for hayton kosky lawyers 300 centre road bentleigh melbourne

EC (Victoria) Stage 1 kickoff

Stage 1 of the EC pilot is due to kick off on August 21 with ANZ, Westpac and Suncorp Metway on board.

Meanwhile User Acceptance Testing has begun or is about to begin. It has all been long awaited but this is the only way forward: implement, test, debug, revise and improve. Sounds like good news and good for morale all round.

As an outsider I agree, get the Victorian model right and national implementation is all that more easier.

Source EC News May 06

Banking - the back office

According to McKinsey, Banks constantly battle to streamline their back-office "factories," with good cause these facilities can be responsible for up to half of their operating costs, excluding interest. Yet whether the factories process mortgages, securities, or other products, banks tend to use the same approach across the board: process reengineering and general cost cutting are the usual favorites, but outsourcing is gaining ground. Most banks also treat the IT operations that support back-office processes as a single, separate function requiring a separate cost-cutting program.

From one study (2002), on the relative efficiency of the back-office operations of different banks, showed that unit-processing costs for the same product can vary a good deal. In mortgage processing, for example, a cluster of banks had unit costs in the range of US$100 to US$200 for each mortgage, while others had unit costs as low as US$50. Such variations, closely linked to scale, were largely explained by how well the banks had designed their factories. Banks with low processing costs had intrinsically inexpensive operations because they had developed focused products, flexible IT platforms, and lean, highly automated processes. These banks could also support a massive increase in volume without raising fixed costs, thus sharply reducing unit-processing costs.

The second study then looked at 5 "smart-sourcing" models:

• Internal upgrades (least successful)


• Outsourcing (conclusion - a favorite way of streamlining standardized, small-scale noncore operations is to outsource them


• External co-sourcing: In a new variation on outsourcing external co-sourcing several banks pool their operations. This is an attractive approach if no large-scale provider exists, but so far, given the problems of integrating different legacy IT platforms, a rare one.


• Internal co-sourcing (shared service centers)- only a handful of players are attempting this strategy, but as banks adopt more advanced middleware we expect that it will become easier to execute. An increasingly popular variant is to move factories to cheaper locations offshore.


• Insourcing: Best-practice factories take on outside business to reach more efficient volumes.

Source for McKinsey info

Australia, take a lead. All others will follow. Insourcing, Outsourcing, Internal co-sourcing. No. What it takes is a new model, simple to use and highly efficient. It has to be digital, its got to be online and it must be collaborative. Secure. How secure do you want it? We can create the industry standards for mortgage processing. One thing it is XML based. Stocks, bonds, futures and currency are traded digitally. Too hard to apply to mortgage processing. Bullshit. Will the customer understand it? Yep, you bet. Do they understand the process now? No. Currently there is no transparancy. Can you track it now? No. If its digital, the Mortgage Broker, the Borrower and their Lawyer will all be able to track it, interact and ensure a high degree of accuracy. Is it paperless? Yep. Truly paperless. Well very close. Digital mortgage processing. Interesting.

Cost of Digital Mortgage Processing? - Definitely at the low end of US$50 And probably even a lot less.

Vendor Disclosure - UK style

It is inevitable. All Commonwealth countries with torrens title land registration systems will all have vendor disclosure, without exception. Even Tassie the last bastion for caveat emptor is currently instroducing a vendor disclosure regime. Victoria which has had vendor disclosure since 1983 will one day, I believe, review the current legislation and push for more regulated vendor disclosure, probably akin to Tasmania, ACT or even the UK.

UK, which I admit I am not overtly familar with, is introducing vendor disclosure + electronic conveyancing. Its called the Home Information Pack.

From 1 June 2007 all home owners in England and Wales will need to arrange for a Home Information Pack to be prepared before putting their homes up for sale. Ruth Kelly, appointed as the new Secretary of State for the Department of Communities and Local Government said:

"Home Information Packs will bring together all the information people need to buy and sell a home, to help them make informed decisions about what is probably the most expensive purchase of their lives. The Packs will especially help first time buyers as they receive the packs for free."

The result of the UK model is it pushes more of the cost onto the seller to give the information upfront rather than on the buyer or the prospective buyer. Kinda makes sense. Plus if you combine vendor disclosure with online publishing as advocated by the 247legal model, it makes even greater sense.

Here's the link for the Department for Communities and Local Government website.

Downloading Music - What's that got to do with conveyancing?

There is a raging debate over laws governing music downloads. Some condemn the Y generation of criminal piracy, while others say they represents the new generation of online consumers.

Yet there is an entire generation that is illegally downloading music and many of whom were taken to court by the Recording Industry Association of America and the local French / Australian equivalent.

In France there is an 18 year old student activist Aziz Ridouan that is lobbying politicians and spreading the message that the music industry is pushing pricing models that are not to benefit of the public nor the artists but to the corporation. Aziz lives in a government-subsidized building in the central Loire region of France with his mother, who works as a cleaning woman. He introduced his nonprofit association that provides legal assistance to those accused of illegally downloading music in 2004 by declaring his downloading habit in the middle of a news conference called by a music industry trade group to announce a crackdown on 50 Internet pirates.

"Until we started speaking out in public, downloaders were only shown on television like terrorists, with their face hidden and voice scrambled," Mr. Ridouan said.

At the news conference, where he held the Hewlett-Packard laptop computer he always seems to carry above his head, Mr. Ridouan added: "I am proud to tell anyone that I download and have plenty of music, movies and TV series on my computer."

I certainly cannot be desribed as Y generation more like late baby boomer. Downloading music illegally is just so easy as is swapping digital music files with friends. That's what is so attractive with the online model.

What's this got to do conveyancing? If we dont change the model we are at risk of alienating law graduates from our industry. Law students today study 5 years with lap top in hand and then when they join the average law firm - think "fuck, you have got to be joking, this is just a friggin paper factory".

And what solutions does Mr Ridouan put forward -

Mr. Ridouan said he was eager and willing to compensate artists, but not at the rate that record companies demanded. As for the amount he can pay, Mr. Ridouan said that for a high school student living with his single mother, he cannot afford much.

"The Internet is a magnificent new way to distribute culture, and why should I be stopped because of my limited means?" Mr. Ridouan said. "The Internet serves my generation the same role as the library did for previous generations."

The solution advocated by Mr. Ridouan is to create a fund, financed by fees from Internet users and Internet service providers, to pay artists based on the popularity of their works, similar to the system used by radio stations.

Backup Backup & Backup Again

Dale Peters of Mr Fixit or Richard King of Computers Cyberspace are the last stops when the hard drive on your file server goes kaput. They have the tools and the knowhow somewhat like an archaeologist of extracting those all important now lost files that somehow didn't ever get backed up. At a cost somewhat like $100 per hour with no guarantees. How do you ever measure downtime let alone the cost of reconstruction? Richard has plenty of stories of whoa of shortsighted business men & women who don't think it will ever happen to them. I personally cannot afford to leave it to chance.

A NYT article put it quite succinctly -
HURRICANE KATRINA uprooted trees, knocked down power lines, flooded homes and obliterated possibly more than a terabyte or two of data. "In all the disaster evacuation check lists, there's nothing about making a copy of what's on your computer," said Janet England, a marketing executive in New Orleans who lost everything in the storm, including all the information stored on her personal computer's hard drive.

Backing up data — making a separate copy — is not only wise in case of a disaster. It's also insurance against mechanical failure, theft, computer viruses and accidental deletions. More backup options have become available in the last two years, priced according to storage capacity, ease of use and privacy protection.

Here is my own personal backup strategy
1. An automated daily overnight backup of essential data to a Network LAN Hard Drive.
2. A weekly / fortnightly of essential data to a DVD (kept offsite)
3. A monthly image of the entire file server hard drive to a removable hard drive (again kept offsite)

Cost:

1. Purchase & installation of LAN Hard Drive - $300. Software - Karen's Replicator - Cost Nil (freeware)


2. DVD burner - $100 DVD - 50 cents


3. Second Hard Drive, Removable Hard Drive Bay, Nortons Ghost $300

Add it up, that's spending less than $1000 upfront. For a medium size business I dont imagine you would have to spend that much more.

When did you last backup?

Rating Estate Agents by Reputation

Victoria has more than 5000 licensed estate agents vying for your listing.

According to the REIV survey of vendors, the most critical factor in choosing an agent was the reputation of the Agent, as opposed to considerations on commissions and fees.

1. Recommendation from others - 23%


2. Already knew the agent - 17%


3. After interviewing several different agents - 11%


4. Shopping around for quotes - 8%

The CEO of the REIV shared these other statistics. Only 3% of vendors chose an agent because they had the lowest commission. Listing as a result of cold calling was a pretty low rank of 1% responses. The survey also found that more than 6 out of 10 vendors rated the experience as a very positive experience and around 8 out of 10 were satisfied. The converse is that around 20% weren't satisifed.

Reputation as you would expect ranks highest when you combine the first two factors.

I imagine the few Vendor Advocates who act for vendors, their primary selection criteria for the appointment of the marketing or selling agent is based on reputation & experience as well as hard statistics.

There is now in the US a website that turns on this very point. homethinking.com

You can select an agent based on their reputation as ranked by the shared experiences and feedback of prior vendors. Part of the websites tagline is "We promise to help you find the most exceptional realtor"

An example of a selling agent with 8 reviews (all positive)

This has been one of the factors behind the phenonomal success of eBay - your feedback rating, where any number of negative feedback can lower your rating.

The same feedback ratings could be applied to property and litigation lawyers.

Houses to Let - Get Online

It's now official - If you want to rent a house or townhouse? - get online.

The Houses to Rent section in The Age was practically void of listings.

• Sandringham - Zero


• Brighton - One private listing only.

Offline Print Classifieds for Rental Accomodation - R.I.P. May 13, 2006

Showered with bids

This anecdote reminds me of an actual similar incident I had – more on that later.

Tony Pride

“We auctioned a flat in one of the areas very popular better avenues.

The owner was fairly tough and open young man who partied hard.

On the morning of the auction we arrived and knocked on the door. There was no answer. We were inside as the crowd started gathering and heard the shower going. So we called out: “You in there Jack?” “Yeah come on in!” he replied.

He was in the shower with his girlfriend. They were lathering each other up and drinking cans of beer!

“Jack the auction’s happening, the crowds starting to come in!” I cried. “No worries, Tony, show ‘em through, we’re staying here!” They did just that!

Many people went through the property. Jack and his friend weren’t fazed – they just kept lathering up and drinking more beers.

The bidding opened well. We referred the highest bid to Jack. “Yeah Tony, go for it, just sell it!’ We did, signed up the buyers, went back to the bathroom and Jack, still in the shower lathering up and drinking beers, leaned out and signed the contracts.

He congratulated me on my performance ad I likewise was very tempted to congratulate him on his enduring performance!

Settlement was quick which suited Jack as he had a court appearance scheduled the following week whereupon soon after, spent a considerable time in a country environment.

Published by Maximiser “Under the Hammer” by Geoff Buck and Sarah McFarlane. I picked up a copy from the Law Institute Victoria Bookshop Bourke Street Melbourne $24.95.

My storey is not that disimilar. One hot summer’s day I had a client Harry who had an interest in buying a serviced apartment re-sale in the Melbourne CBD. The 3 bedroom 2 storey apartment was centrally located and by all measures a rock solid investment returning about 6% nett. Harry simply wanted to inspect the property before making the commitment. Like Jack, Harry is just a little eccentric.

The inspection was simple enough. Make an appointment with the serviced apartment operator to make sure the apartment was not occupied. There was nothing especially special about this apartment. Three bedrooms spread over two storeys. I show Harry the apartment and pointed out its amenities. On inspection of the bathroom, Harry has a request. Could he have a shower? A little unusual. But hang on, you have to consider any request as a sale may depend on it. Thinking about it. Why not, its going to be Harry’s apartment anyway! Five minutes later, Harry emerges, showered and refreshed. And Bingo, Harry now owns one very fine 3 bedroom 2 storey apartment in the centre of Melbourne’s CBD

Maps - the battle between domain vs realestate

Map based searching is really starting to take off in the US and one area that is really benefiting is real estate. A really great example is zillow.com
zillow is a zoomable, scrollable map covering a database of millions of houses. Buyers can check prices and track suburb averages.

According to a recent Age report here are comments from the respective industry leaders realestate.com.au and domain.com.au

All major players in Australia's online real estate industry plan to add Zillow-like geographical functions to their sites this year. "We are looking at more detailed maps, the ability to zoom in - property boundaries plotted on top," says Simon Baker, chief executive of realestate.com.au. He says "maps drive greater usability and allow you to present more information in a useful way". With mash-ups, the old real-estate phrase "close to amenities" is instant graphical proof. Sites could plot schools on the same map, and show school catchment areas, local shopping centres, public transport, restaurants and police stations. There is also the ability to overlay census data such as demographics, average ages, house prices and crime rates.

Fairfax's domain.com.au also sees maps coming into play in online real estate. "Maps are essential tools in the process of connecting property buyers and sellers," says Sam Plowman, general manager of online real estate at Fairfax Digital. "They are becoming more prolific, both domestically and overseas, due to the increased functionality on offer. They are also becoming easier to use and read. Maps will play a part at both the start and end of a search."

Sam Emerson, chief executive of realestateview.com.au, says maps can be a "fantastic" tool for consumers. "(Mapping is) a necessary space to be in for any property portal in the future," he says.

There are several signs that Australian users are looking for maps online. Visits to the "travel-maps" category by Australian internet users grew by 44 per cent over the past year, according to the search intelligence company, Hitwise. Almost half of those hits were on Sensis' whereis.com. Sensis claims a 70 per cent growth in the use of whereis.com over the past year, to approximately 1.5 million visitors per month. But Hitwise claims that much of the growth was driven by Google Maps and Google Earth.

Here's a current directory / sitemap to WEB 2.0 Products and Services relating to real estate & rental in the US. This section is really starting to hot up as you can see by taking a tour of the following sites

Homethinking
Hotpads
Real Estate ABC
RENotebook
Streeteasy
Trulia
Zillow

50-year mortgage hits the US market

US Lenders have begun offering a half-century home loan as incentive in face of record-high home prices, rising interest rates. As home prices and interest rates keep rising, lenders have figured out a way to keep the dream alive for millions of people who want to own their own home. It's called the 50-year mortgage.

According to a report Wednesday in USA Today, a handful of small lenders have begun offering 50-year adjustable-rate loans to buyers who need to keep payments low in the current economic environment. Most US banks already offer 40-year mortgages, which account for about 5 percent of all home loans, the report said.

"One of the biggest things in California is the high costs of homes. With rates going up, there's demand from customers (for) longer loans," Alex Diaz Jr., with Statewide Bancorp in Rancho Cucamonga, Calif., was quoted in the report as saying.

Statewide, which introduced its 50-year loan in March, has already received about 220 applications, Diaz said, according to the report. The 50-year mortgage also signals that the cooling real estate market is heating up competition among lenders, the newspaper said.

I just did a calculation on a $300,000 mortgage, 50 year term, 7%
monthly repayments = $1805
interest component = $1750
Annual Principal Reduction = $660

Compare repayments to a 25 year term
monthly repayments = $2120

The 50 year mortgage is practically speaking an interest only loan.

Advertising of home loans. Personally I like how the US mortgage providers advertise home loans. They neither focus on nor do they mention the interest rate.

"$145,000 mortgage for under $485/month! Think you pay too much on your mortgage?"

They sell mortgage loans just like car loans. Shift the focus to the monthly payment not the rate. That actually makes sense.

UK electronic conveyancing pilots to begin in October 2007

The Land Registry said last week the first electronic conveyancing pilots would begin in October 2007.

Because electronic conveyancing is such a huge change from the current method, the process will take two or three years to be compulsory for all house buys.

Electronic conveyancing will allow the whole process to be conducted online. It will open access to conveyancing information from start to finish via the web.

It will also provide a way for all payments in a chain to be paid simultaneously, with automatic registration of ownership on completion. It is being designed to help reduce the delay and stress of house buying.

Typically this takes about three months - twice as long as in most other European countries. According to the Land Registry, the longer conveyancing takes, the more likely the deal is to collapse through gazumping, gazundering or frustration of parties linked in the house-buying chain.

The registry believes that by moving the system online, it will become faster, more transparent and less likely to see deals fall through.

When it comes into force fully in 2009-10, it will revolutionise home buying. Electronic conveyancing, or e-conveyancing, will speed the process towards exchange, remove the gap between completion and registration, make clear any hold-ups in the chain, cater for simultaneous electronic funds transfer and be paperless.

Anyone who has bought a house will know how frustrating and stressful it can be. Searches can take weeks and exchange can be nerve-racking.

With e-conveyancing all the parties, including estate agents, solicitors, and lenders, will be connected electronically.

The draft contract will be transmitted electronically from the seller's conveyancer to the buyer's conveyancer. Validation checks will authenticate it to keep every stage of the process secure and protect all parties from fraud.

Conveyancers will record on the system the stage reached in each contract. This clears up the frustration of wondering who is delaying the process. Contracts will be signed electronically, exchanged electronically and sent at the same time. No longer will you have to wait for the other party before proceeding to the next stage.

When both parties are ready to complete, registration and completion will take place simultaneously. All fees and payments will be settled through an electronic funds transfer.

Almost all conveyancing searches can now be done over the internet, although sometimes the result still has to come back in paper form.

The benefits of technology will certainly help in other aspects of house buying. It is far less certain if it will solve other problems in conveyancing.

The other unknown is the cost. We are still not aware of the charge for this overhaul of the system, or its cost to users.

Richard Freeman-Wallace is head of property at law firm Watson Burton in Newcastle UK

Comment: Personally I think it is a grand idea to promote electronic conveyancing as a start to finish operation. But, and it is a Big But, I believe the various parts of the system need to be modular. One part handles disclosure. Another part handles exchange of contracts. The next handles the relationship between the financial institution and the client & the client's legal representative. And finally the last part of the process is settlement, stamping and registration. It is far too ambitious to attempt a single start to finish process as described by Richard Freeman-Wallace. Each modular section can be interlinked with the next part of the process. The modular system would be far more robust. There are no inter-dependencies per se. The system can be far more flexible in design. And that's what XML excels at. Create XML standards for data and document exchange and all the separate systems can be easliy interlinked. Keep it simple.

Craigslist dominates US rental listings

The NYT ran an interesting article on preferences of US renters and shared accomodation. The operative word is "no": for starters, no pets and no smoking.

Users in the San Francisco Bay Area appear to be among the least interested in rooming with a pet. This area had the highest percentage of "no pets" listings during a key-word search last Thursday (slightly more than 16 percent of 32,295 housing listings). In Boston, about 14 percent of 45,880 listings said "no pets."
Dallas, Wyoming and Birmingham, Ala., seemed quite pet-friendly by comparison: only about 1 percent of the housing listings in each location said "no pets." But Wichita, Kan., emerged as one of the most accepting places, with less than 1 percent of the listings snubbing pets.

In some parts of the country Craigslist housing postings are an essential part of the real estate biosphere. New York is by far the leader in this regard (it had some 180,245 housing listings last Thursday).

There are some incredible statistics. They are all seeking and selling housing on Craigslist.org, the electronic listing service with sites in all 50 states and more than 200 worldwide. And because users pay nothing (for now) and are able to go on at length about who they are and what they want, their postings provide a sociological
window into housing trends and desires across the country, from the neon cityscape of the Las Vegas Strip to the wheat fields of Wichita, Kan.

New York Times

Mortgage Processing - How Broken Is It?

I will venture to say on behalf of all Lawyers and Conveyancers that Mortgage Processing and Settlements by our major Financial Institutions is abysmal. Is that the right descriptor? Perhaps crap is another. And this is at a time when mortgage loans are dominated by the Big 4 and they have at a guess 80% of the market. Sure they process a hell of a lot of loans. But so does the ASX and their back end systems process a hell of a lot of share trades. The SFE trades a hell of a lot of futures contracts.

The difference, securities trading is paperless. These institutions ASX & SFE made the neccessary changes years ago and are in a constant state of technical improvement. Plus securities are traded globally 24/7/365

I cant say I see any changes being made by the banks that has made any difference to service levels for lawyers conveyancers and dear I say it the poor old client.

Lets just illustrate this by example.

• We have to supply the bank with a copy of the Contract and Transfer of Land. We have many instances of this being faxed to the Mortgage Processing Unit (MPU) twice and even three times as they disappear into the black hole.


• Security documentation is issued to the Customer in triplicate and all too often there are mistakes, major minor it doesn't matter. The security documenation has to be re-issued.


• Booking Settlements - a simple thing to do - but why do we have to be kept in queues for 10, 15, 20 minutes. Why? - its not a cost to the bank - its an external cost borne by the Conveyancer. I may have to look at passing this cost onto the client.


• Cheques - oh dear - banks require a minimum of 3 or 4 days notice to book in settlement but cant give a payout figure til the friggin day of settlement!


• Settlements fall over - why? - signatures on the Contract, Transfer and Mortgage don't line up. Middle names are on the Mortgage but not the Transfer. Who pays? - well generally the client and almost never the bank


• Communication - Fax or Phone - that is the choice. And then we only get to speak to a tele-worker who has no personal responsibility for the file. No email. No web services. What an abysmal choice we have.


• Open for Business. We are still back in the Post Office days. Open the doors at 9 and closed on the dot of 5. Try web services. Anytime Anywhere 24/7/365 - no weekends, no public holidays, no sick leave, no superannuation ...
  

These things I describe above occur relentlessly. Every day (well every week day between 9-5 excluding public holidays) and almost every file.

The solution - a digital standard that applies across the Industry. NECS has part of the answers, the Banks have to deliver on the rest. It's not that hard.

Oh yeah, Lastly. The first bank that has the courage to implement change - without doubt - their market share would increase - significantly. Any takers?

The Relentess Switch to Digital Media

For some time now I have been watching the relentless drift or switch away from print media to digital media. Three areas which have proved to be the litmus test. Employment, Cars & Property.

The Age reported Seek.com.au expected earnings before interest, tax, depreciation and amortisation of $46 million to $47 million for 2005-06. This is up from previous guidance of $43 million and ahead of a $40 million prospectus forecast. Also reported Joint chief executive Andrew Bassat said that this year the internet had overtaken newspapers as the primary portal for job searching, further driving Seek's earnings growth. "We think there's certainly no doubt the migration will continue to move apace," he said.

Seek dominates the online job advertising market with a 46 per cent share of ads, followed by News Corp's CareerOne and Fairfax's MyCareer.

I have already commented that Property Rentals has all but disappeared from the Age's classified section. The Section is left to a few private advertisers and the odd Agency still pops an ad or two in (more often it is the independent agencies). The reasons are obvious. Price is one factor. The other is how much more you can say and describe the accomodation, photos, email contact etc. Also it is 24/7 anywhere.

The other category - Property Sales has also been sorely dented. The Section is certainly good for checking Open For Inspection times. By the way, why do agents persist with the mid-week OFI? It's a weekend thingy to do.

Here, at 247legal.com.au we are working on moving Vendor Statements off-line to an on-line model, industry wide that is. More on that shortly.

NZ - Is it true? No transfer stamp duty

In researching New Zealand's electronic dealings regime I asked myself what about payment of stamp duty on the transfer of property. After a google search an investment property website had this to offer - its too good to be true

"Imagine I told you that there was a Western country where there was:"

• no capital gains tax


• no estate or death taxes


• no wealth tax


• no transfer tax or stamp duty


• unlimited deductibility of losses (paper or real) in one enterprise against profits in another


• no limit to the amount of mortgage interest you can deduct against income


• and generous depreciation rates based on purchase price

Transfer duties and capital gains tax are the two biggest hurdles preventing property freely turning over like stocks and bonds. One is a large ingoing impost. And the other is irrationally imposed differentiating between your private home and investment. And Australian governments are always looking for ways to screw you further. Also dont forget about the ludicrously high transfer registration fees we also cop. Australia is talking about ridding transfer stamp duty on commercial transactions but leaving it on residential. Australia, take a leaf out of New Zealand's tax regime.

New Zealand Inland Revenue website
Instruments executed after 20 May 1999 no longer attract conveyance duty or lease duty ("stamp duty") and do not need to be submitted to the Department for stamping.

Query the implication of NZ GST on property sales?

Take stamp duty out of the equation, a No Transfer Stamp Duty regime makes electronic dealings much simpler indeed.

New Zealand - Settlement Procedures eDealings

This is an extract from the workflow practice manual for NZ solicitors to conduct a property settlement (handing over the cheques) and the following e-registration of the property instruments (the transfer and the discharge mortgage) - quite similar to performing a settlement by mail that occurs between city and country practitioners.

Step 7 – Settlement Arrangement
Settlement processes are very similar in the e-dealing environment to the manual environment, except reliance is on the electronic transaction rather than physical paper and there are no copies of documents to be faxed backwards and forwards. This step also involves checking that settlement funds have been deposited as expected, which is critical before moving on to the next step.
7.1 Process Description
Settlement of an e-dealing is conducted outside of Landonline. The only part of the process performed in Landonline is releasing instruments. This is covered in step 8.
7.2 Process Flow
Normal manual processes apply.
7.3 Workflow Impacts
No copies of faxes are required for this step. In face-to-face settlements there is an opportunity to see the documents being released on the screen at the Vendor’s solicitor’s office when handing over the cheque.

Step 8 – Release instruments
At this point in the process, the vendor’s PC (Primary Contact) releases each instrument to indicate that settlement has been completed. This process is similar in the manual environment to sending documents by DX or mail.
The CP (Conveyancing Professional) does not need to be involved in this step of the process. This is similar to the manual environment, where the CP will often leave the legal executive to settle and register without the need of supervision.
Note: It is important to check that settlement funds have been transferred correctly before completing this step. Firms may need to consider revising internal policies that govern settlement to ensure that instruments are only released once authorisation of settlement has been obtained.
8.1 Process Description
Any user from the same firm with the appropriate privileges can release an instrument. Before you can release an instrument it must first be certified and signed.
8.2 Process Flow
Once all instruments have been released in an edealing, it is ready to be submitted to LINZ for registration.
Editing a released e-dealing
If any party who has edit access to an e-dealing, edits an instrument that has been released, Landonline clears all certifications and signatures and provides an appropriate warning message. In this situation, each edited instrument must be re-certified and re-signed.
8.3 Workflow Impacts
• There is greater trust in the system as visibility of the transaction and its progress is high.
Reliance on the other party (as is the case in the manual environment) is reduced.
• There is no risk of physically losing documents.
• There is no risk of documents being un-registerable.
• Fewer settlements need to be delayed due to original documents being unavailable, as faxed documents can be relied upon.
• There are no agency charges on the discharge.
• There are no resubmission fees if an e-dealing is rejected.
• Pre-validation ensures that there is no chance of missing something required for registration.
• There is no chance of being fooled by ‘twink’ at the last minute!

Step 9 – Submit dealing
Once the purchaser’s PC has released all instruments, the e-dealing can be submitted to LINZ for registration.

Termininology
Primary Contact (PC)
This is the person responsible for the day-to-day management of the e-dealing. Normally, this would be a Legal Executive.
Conveyancing Professional (CP)
This is the person responsible for certifying and signing a specific instrument. They must be legally authorised to perform conveyancing services and hold a current practising certificate or be a licensed land broker. Normally, this would be the solicitor responsible for the dealing.

New Zealand 100% e-lodgement 2008

The New Zealand Government has announced that 100% electronic lodgement will be phased in by 1 July 2008.

There appears to be encouraging signs of wider adoption of electronic dealings as more firms are making the transition.

Here's the link to the announcement and feedback

Roadmap for 100% e-lodgement

Key dates

The withdrawal of paper-based lodgements, and move to 100% electronic lodgement via Landonline, will be phased in gradually, commencing with Discharges:
1 May 2007 Discharges
1 Aug 2007 All Transfer & Mortgage types currently e-dealing capable
1 Sep 2007 Survey lodgements
1 Jul 2008 All remaining Title transactions

Recently published by the New Zealand Law Society Property Section are e-dealing worklow guidance for solicitors April 2006. This gives a overview of the NZ system of which the Australian NECS model will have many similarities.

NZ Property Law Section e-Dealing links to useful papers

Electronic Transaction Act 2002 New Zealand

New Zealand has adopted the International Protocols for electronic commerce with the enactment of the Electronic Transactions Act 2002

world’s largest property database

Land Registry UK holds the world’s largest property database of over 20 million titles. Land Registry guarantees ownership of many billions of pounds worth of property. Around £1 million worth of property is processed every minute in England and Wales.

"The e-conveyancing programme will be introduced incrementally to the property market and initially on a voluntary basis. It will, nonetheless, be a massive change for everyone involved which makes it important that we proceed in manageable steps and in accordance with a clear timetable. Stakeholder feedback has helped us to identify a preferred date for implementing compulsory use of the electronic system by 2009 or 2010. We will continue to listen to the stakeholder community and to refine our plans as appropriate." Land Registry Chief Executive, Peter Collis

The Universal Electronic Conveyancing System ?

There is certainly no single universal digital / electronic conveyancing application. The fact is there will be many. But one thing is for sure. If they cannot interlink with the process that precedes it or that is next in line that application won’t form part of the digital conveyancing chain that will be a linear end to end digital conveyancing system. The systems by nature have to be collaborative. One black box has to be able to talk to the black box before and after it in the chain.

What will be common to all these systems – XML digital standards. Standard vocabularies. Standard schemas.

Electronic conveyancing has been with us for a while. The first application that is in use today are applications not being used by lawyers or the legal industry. No. The legal industry is yet to adopt digital or electronic conveyancing. The first application of electronic conveyancing which is XML based that is now being used widely is electronic lodgment of credit applications by mortgage brokers to financial institutions. Roughly 38% of all applications industry wide for mortgage finance are being lodged by mortgage brokers electronically. It used to be all applications were paper based and lodged via the fax. Not any more. Westpac has a policy of giving priority to electronic lodgment over faxed applications. Westpac’s average for electronic lodgment is close to 60% therefore being way ahead of the industry average.

Credit has to be given to LIXI an industry standards body being a non-profit organization whose membership are financial institutions, mortgage brokers, technologists and any entity interested in inter-company straight-through processing for mortgage and conveyancing. This body wrote the first standard for Credit Application Language (CAL) that has been the foundation for electronic credit application lodgment.

Credit applications and approvals are the first step. The standards established by the first step will form part of the cornerstone for intermediate applications to be established to ultimately interlink with the final step of NECS (stamping and registration as well as online settlements).

As I said at the beginning there will not be one single universal digital / electronic conveyancing application. There will be a handful of applications that will all be capable of interlinking, all based on the XML standard for data and document interchange. The technical standards are being formed. It is now important to create the business applications based on the technical standards. 247legal is an example of one application that deals with vendor disclosure and creates a digital conveyancing network between lawyers & estate agents, vendors & buyers. There will be many more applications to appear that will create the next link in the daisy chain.

Re-Launch Hayton Kosky website

Hayton Kosky Lawyers has recently updated and re-launched their website. The site looks fantastic. The thought behind the production was to create a professional looking presence on the web, tell customers what we do and provide quality informative content especially in the area of property conveyancing. The site also works well as a tool for the lawyer and staff. As an example when confirming instructions to act and quotations , full referencing in the email or letter is made back to the website. The site also complements the drive towards full digital and electronic conveyancing. Clients, new, current and potential, know exactly what the scope of services that the lawyer is providing and is fully informed on process. There are selling and buying instructions forms for clients to complete and submit. All in all it is more than just mere brochure-ware and links to useful sites which what most legal websites tend to be.

A lot of the credit belongs to Matt Ling of Ling Design for production and design values. Any law firm wanting a website designed or re-designed can look no further. Matt only does bespoke design and stays away from formulamatic template driven websites. Matt can be contacted on 0401-440-395 or by email

Post Settlement Hangover

In a recent discussion I flagged the issue I have with our current settlement, stamping and registration regime. I made the observation that we hand over clear funds in exchange for title and a registrable instrument (ie the Transfer) and it is up to the lodging party to stamp and register the transfer with no guarantees.

Well this week we have had a shiny example of what can go wrong and the consequential repurcussions of delays in registration through requisitions from the State Revenue Office and caveats being placed on title before our client's Transfer could be lodged and registered.

Our client was a purchaser of an off-the-plan apartment in Docklands which he managed to on-sell to a subsequent purchaser.

First we looked at the possibility of flicking the Contract by way of nomination to the subsequent Purchaser (without profit). This would have meant substantial cost savings in stamp duty and mortgage set up costs. Timing issues prevented this happening. I could see the State Government was going to be the winner with two lots of stamp duty payable.

Our client settled his purchase. Problem one. State Revenue Office had a problem with the land & building statutory declaration as prepared by the Head Vendor. As all Victorian lawyers & conveyancers are acutely aware this is not surprising, given its complexity not just to practitioners but to clients as well. Result more stamp duty had to be paid. Winner State Government. Loser Client and Practitioners. Delay - 3 weeks.

Proceed to lodging with Land Titles Office. Problem 2. Registration refused. Intervening caveat had been lodged by subsequent purchaser. LTO had long abandoned policy of rejecting such caveats when no nexus being caveator and registered proprietor exists. Then we had legal practitioner for subsequent purchaser demanding $3000 for their consent to be given to registration of our transfer !@#? 100 / 100 for most silly stupid demand I have heard in a long time. Stupid demand for $3000 was withdrawn. Now her client is sitting / stranded in a hotel waiting for registration of our Transfer and our mortgagee to arrange discharge so she can settle and move in.

As I pointed out there needs to be a two phase settlement process.
1. Stamping & registration (in escrow) and then
2. handing over settlement funds upon which registration becomes absolute.

Such problems and other such like problems just disappear.

From a digital / electronic conveyancing perspective such as NECS there is probably merit to such an approach. Separate the processes. Less complexity and greater flexibility.

Banks failing the online mortgage game

The Age has reported "The major banks are failing home buyers who want to process their loan applications online, with customers facing poor service and convoluted forms, a new survey has found".

Not surprising. In my law practice I rarely see clients using the online application route. Its either the Branch or the Broker. Occasionaly we see either a Homepath or an ING Direct, both online applications.

Homepath offers a no frills low interest rate loan. But their service in loan approval, preparing loan documentation and settlement organisational skills I would rate very poor (actually they would be in the bottom quartile). You might get a no frills loan but it's a no thrills service. You wouldn't want to throw them a curve ball.

No wonder customers turn to the brokers or the branch. You at least get service. The mortgage broker we often turn to, service is the key to their success. Submitting an application is actually an art form. Most applications are at least 20 pages long. Then they actively follow through in getting the approval and personally attend the client for signing up the loan and security documents. Full marks.

Turn to the online model. As an example I logged onto Virgin Home Loans, the newest entrant. I failed to get beyond Step 1. There are just too many fields to complete. Step 1 is one of 6 steps. Really, keep it simple. Get the customer to fill in a one page summary, collect $200 or $300 upfront and send out a mobile lender to take care of the rest. Refund the $200 if they proceed to settlement. Guys its about service and delivery.

In my conveyancing business I collect a deposit upfront. Customers dont mind. Thereafter they are committed. We collect a deposit and we then prepare and deliver vendor statements online. If the property doesn't sell we don't need to invoice the client as the deposit has covered our costs. We collect the balance of our fee at settlement.

Ditto for mortgage applications. Collect a deposit upfront and give some real service and that certainly doesn't mean some tele-worker who doesn't understand the customers needs or requirements.

Anyhow, the online forms don't work for me. I'm one of those who don't mind paying a bit extra for service.

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.