You may have heard of the term “PEXA” hovering in recent news or in the Australian Financial Review, specifically as the PEXA Group Ltd went public in an IPO on 1 July 2021. So, what exactly is PEXA, how does it work, and why does it matter to you where you are looking to sign a contract to buy or sell a property?
The PEXA Group Ltd provides the service of the same name, which stands for Property Exchange Australia, and was developed to serve as an electronic platform for a property transaction in Australia.
The first transaction via PEXA was in November 2014 and while it took time for property lawyers and conveyancers to learn the new process, in 2021 most firms and banks in Australia now use PEXA as the preferred method for property transactions.
In NSW, the usage of PEXA has been mandatory for all property transactions since 2019, and it is expected that the rest of Australia will grow more into e-settlements in the future.
- Convenience – transactions online have obvious conveniences over the traditional settlement requiring hand signed papers, cheques and postage. The parties are no longer required to meet in person on the settlement date to exchange documents and therefore the transaction is much less susceptible to delays for unexpected events (such as lockdowns or indoor restrictions in this current pandemic).
Electronic payments on the day of the settlement, also means that the settlement funds will clear faster, compared to depositing bank cheques which may take up to 3 business days to clear.
- Accuracy – In PEXA, all parties are in one electronic platform, including the buyer, the seller, incoming and outgoing banks, where all parties can see visually the progress of the transaction and the next steps. In our experience, this availability of information and transaction status, decreases the risk of errors or miscommunication between parties and potential delays. All communications are through the platform, so messages through phone calls or emails do not get missed and parties are all given live information immediately.
- Costs – while PEXA has fees associated with its service ($117.92 for Transfers as of 1 July 2021), in our view, this fee easily offsets the usual costs associated with traditional settlements including, fees for settlement agents, postage and administrative work, associated with preparing cheques and paper documents.
In states where PEXA is not mandatory (including Queensland), a property transaction can only occur via PEXA if all parties in association with the transaction agree to use and are registered to use PEXA (or has an agent that is registered). If your lawyer appointed for your property transaction is registered with PEXA, they will first confirm with you whether you are agreeable to proceed with an electronic transaction.
If having your property transaction proceed via PEXA is necessary because of a remote location of a party, you should request your lawyer or the estate agent insert into the Contract, a special condition requiring that PEXA must be used. This will ensure that all parties can only engage firms that can use the platform.
Perspective Law is one of the earliest users of PEXA in Queensland and we have highly experienced lawyers that will be able to assist you in your property transactions. If you would like to enquire about a potential property contract or have any questions about PEXA, please do not hesitate to contact our office on (07) 3839 7555.