PEXA Introduces the Ability to Register Leases
Assisted by Maja Podinic.
Whilst it was just last year that the property industry was forced to get its collective head around the conveyancing portion of the Property Exchange Australia (PEXA) system, it has since 10 December 2018 been possible to register leases via PEXA - an update that has required many to take an even closer look at the growing benefits of the electronic conveyancing platform.
On hearing the news, my initial reaction was one of wariness - although having reviewed the actual requirements for registering a lease, it seems that this recent change does have the genuine potential to reduce the time that it takes to register leases here in Australia. It is also clear that the procedure for registering leases via PEXA is easy to use and will, hopefully, facilitate a faster move towards electronic signing of leases.
What is the new process?
Users are now able to register a lease on PEXA if it falls within the following categories:
- It is a standalone document;
- It is in combination with other documents (i.e. Transfers or Mortgage Discharges); and
- It is in a series with other leases (i.e. consecutive leases).
Once a Workspace has been created in PEXA, the user will be either automatically invited, or tasked with extending an invite to the other party (dependant on whether they represent the landlord or tenant).
PEXA's ability to register leases negates the need for the LRS 07L form that many have become accustomed to, as the new system automatically generates a cover page based on a series of questions asked of the landlord. Whilst this PEXA cover page does look different, it encompasses all of the relevant details, including lessor, lessee and lease specifics.
At present, there is no resource available to draft the Conditions and Provisions on PEXA (although this may be something to look out for in future releases). With this said, the process simply requires users to upload their document to the Workspace. From there, it is possible to attach Plans, Ministers Consent and Caveator's Consent documents, Tenancy Guides and Disclosure Statements (for retail leases).
Practitioners sign off on behalf of their client (once they are given authority via a PEXA authorisation form) and the responsible party lodges the lease to the Land Registry.
The PEXA system allows practitioners the ability to invite the Mortgagee on Title into the Workspace, and for mortgagee consent to be given electronically. It is currently uncertain, and time will tell, whether banks will insist on obtaining hard copies of such documents - however, if not required, it would provide the opportunity to speed up the finalisation of the leasing process. In my experience, finalising the registration of a lease can often be delayed by the mortgagee consent process.
Is there a downside to this new system?
Practitioners will be required to obtain a PEXA Client Authorisation and will need to complete a verification of identity. Whilst this may add an extra step to the leasing procedure, I expect that most practitioners will be happy to accept more robust methods through which to identify clients. This change will also provide uniformity across firms with regard to client verification - especially due to the fact that in some practices, verification of identity is mandatory.
Whilst the system is currently only designed for leases, PEXA has suggested that Surrender and Variation of Leases will be released in the first half of 2019 - meaning that we are still waiting for subleases and assignments to be made available via the online platform.
There is no mention of when the registering of leases via PEXA will become mandatory, however practitioners should familiarise themselves with the electronic process sooner rather than later in order to ensure that they are effectively utilising all available services.
What you cannot escape from?
One point that must be noted is that users will still be requisitioned if there is an issue with a submission, and that the lease may be made subject to manual review at the Land Registry if it does not meet all requirements - so you cannot expect to make shortcuts with page numberings or plans. It appears that these requisitions will be issued via the notifications and chat section of the PEXA portal. However, if you are requisitioned, you will receive a dealing number for the documents, visible in your PEXA workspace. This is useful, as the number will allow you the ability to directly follow the progress of the relevant matter with the Land Registry.
The lodgement fee associated with registering a lease will no longer be applicable on the PEXA platform; and has been replaced with a PEXA fee. The price difference between a lodgement and PEXA fee is not significant, with the latter costing $42.24 for a single title lease.
Although some practitioners may wish to bury their heads in the sand and look to avoid change, I feel that this reform is another step in suitably pushing the leasing industry into a more efficient place one which undeniably provides a myriad of benefits not only to practitioners but also to their clients.
If you have a query relating to the new PEXA system, or you would like to speak with a lawyer in Coleman Greig's Commercial Property team with regard to your own matter, please don't hesitate to get in touch: