Queensland electronic conveyancing mandate: implications for not-for-profits

Titles Queensland announced that it is bringing conveyancing into the modern age by making electronic conveyancing (‘e-conveyancing’) mandatory in Queensland from 20 February 2023. This is in step with most other states and territories in Australia.

As a result, the traditional way (i.e. attending physical settlement for handing documents in exchange for cheques and subsequent lodgement Transfer Documents with the Queensland Titles Registry) will soon be at an end.

This article sets out some context for e-conveyancing in Queensland and how it might affect not-for-profit’s (NFP’s) in particular.

 

Background

Property Exchange Australia Limited (PEXA) provides the leading platform for electronic conveyancing. Although PEXA was introduced in 2010, the surge of users rose during the height of the pandemic when physical settlements became near impossible and when the standard terms in the REIQ contract were updated to reflect this ‘new normal’.

Advantages of Electronic Conveyancing

There are several advantages to electronic conveyancing over traditional paper settlements, including:[1]

1. significant reductions in requisitions;
2. immediate lodgement and confirmation of registration of dealings;
3. a secure financial environment for quick disbursement of proceeds.

 

Requirement for Client Authorisation Forms and Verification of Identity

Electronic conveyancing platforms use advanced encryption mechanisms to protect customer data and user and business-related information. [2] However, the fraud risk in conveyancing transactions is primarily managed by the requirement for lawyers / conveyancers to go through an extensive verification of identity (‘VOI’) process with their clients and to have their clients sign a mandatory Client Authorisation Form in order to settle electronically. This means that lawyers act and sign documents on their client’s behalf on e-conveyancing platform.

Client Authorisation Forms and VOI either need to be completed:

1. in the presence of your lawyer; or
2. your lawyers authorised VOI Agent, such as Australia Post.

Our guide for VOI is accessible here.

Refusing VOI may cause delays to a time-sensitive transaction, or worse, the lawyer or conveyancer may cease acting for you.

 

What does this mean for Not-for-Profits?

In our experience, mandatory electronic conveyancing presents 3 key issues for not-for-profits (NFPs):

1. VOI of Voluntary / Disparate Governors

In our experience, most governors (directors, committee members, elders etc.) of NFPs are volunteers. This means that the NFP’s governors are unlikely to be available during business hours to attend their lawyer’s office for VOI purposes. This also often means that governors are not necessarily local to the lawyers they choose for their legal services. This often makes the VOI step ‘too hard’ for NFPs. We recommend that this be managed in 3 ways:

• When NFPs first start taking steps to acquire or sell property, they should proactively seek out a lawyer so that the VOI requirements can be managed before they become urgent;
• NFPs should speak to their lawyer about flexible VOI options, which may involve having VOI and Client Authorisation forms dealt with at their local post office. We can assist with arranging this; and
• If you are an NFP that acquires and sells property often (such a denominational property trust), we recommend that you enter into a ‘standing authority’ with your lawyer to avoid the need to go with the VOI and Client Authorisation process for each transaction. We can assist with arranging this.

 

2. Applying for transfer duty (aka stamp duty) exemptions

Although we expect that there will be further updates between now and the cut-over time in February 2023, due to Queensland Revenue Office (‘QRO’) requirements, NFPs applying for transfer duty exemptions are currently required to either:

• Settle via paper, which will soon be unavailable; or
• Settle electronically (including remitting transfer duty) and seek a subsequent transfer duty exemption and refund. In our experience, this often creates problems for finance approvals and cash flow.

Until such time as QRO updates its processes for the assessment of transfer duty exemptions, we note that processing times are currently approximately 30 days. In the meantime, we recommend that that NFPs ensure there are appropriate special conditions in their contracts to allow manage this issue. We can assist with drafting the necessary special conditions.

 

3. Churches structured as unincorporated associations

It is common for churches to be structured as unincorporated associations. This means that a church’s property will usually be held in either:

1. a specifically set up charitable corporate property holding trust for the church; or
2. a denominational trust; or
3. the name of some of the church’s congregants as trustees for the church.

This can complicate the VOI process and Client Authorisation Process and in our experience is often misunderstood by conveyancing firms. As specialist charity and NFP lawyers, we deal with these structure types daily and are therefore well placed to assist with your conveyance and manage this step.

 

Have a question about e-Conveyancing Mandates?

Vocare Law is well equipped to assist our clients with a wealth of collective knowledge and over two decades experience providing insight and advice in this area. If you have any questions about e-Conveyancing. Contact our office on 1300-VOC-LAW / 1300-862-529 or email: enquiry@vocarelaw.com.au

This article was written by Paul Neville.

**The information contained herein does not, and is not intended to, constitute legal advice and is for general informational purposes only. 

 

References

[1] Titles Queensland eConveyancing

[2] PEXA: How we protect you

 

Helpful Links

• Legislative Changes for Incorporated Associations in QLD – June & July 2022.
• Case Note for Member Disputes in Incorporated Associations: Singh Ors V Brisbane Sikh Temple (Gurdwara) INC [2022] QSC 151.
• Better understanding your obligations as a governor of a charity.
• Guidelines for Public Ancillary Funds [2022]