Australia is now home to its very own electronic exchange for property. PEXA, as it is known is a huge leap forward for an industry that has been lagging well behind its peers in terms of technology adoption.
PEXA is a platform that allows four-way property transactions (vendor, purchaser, and 2 banks) to exchange the titles and funds associated with a property transaction. This is a function that until recently was conducted in physical settlement rooms with all parties attending. This is a great thing, it streamlines the process, checks errors and is super-efficient and user-friendly.
We know security is paramount when transferring property and bringing this online is likely opening up the system to compromise. Vendors, purchasers, and banks will have to trust that PEXA’s security system to protect against fraud is sufficient. These include restricting PEXA’s users to lawyers and conveyancers and requiring verification-of-identity (VOI) checks to be performed.
One of the major appeals of Australia’s own Torrens system (developed in South Australia), which is also used in New Zealand, the UK and 11 states in the US, is indefeasibility of title. The idea that once the title is registered centrally at the Land Titles Office it cannot be defeated. Therefore, we can always rely on the registration to settle disputes.
Given this security concern and the need for indefeasibility of titles, there may be an ever better alternative to the PEXA platform and the centralized exchange – Blockchain technology.
Already being used by currency exchanges and stock exchanges worldwide – Blockchain technology is a digitally native, decentralised source of truth which preserves the authenticity of a transaction and it insures against fraud. Crucially it is decentralised and does not require extensive systems to maintain the source of truth. A property title system based on Blockchain could essentially form the basis of both the source of truth (Land Titles Office) and the exchange (PEXA). Governments would be able to uphold indefeasibility of title in tandem with the blockchain
Progress in currently underway in other jurisdictions. It may simply be a matter of time before we see something similar here in Australia.
Law&Co is built around embracing new technology and providing a title exchange service that is simple and affordable. If you would like to speak to one of our lawyers, please call us on 1300 776 775.