Why Your Electronic Settlements Won’t Clear on June 8
Over the first weekend in June, New South Wales and Victoria celebrate the Queen’s Birthday. As a result, the Reserve Bank of Australia (RBA) will be closed for the public holiday on Monday, 8 June 2020. This means electronic settlements handled by PEXA won’t be processed. For those who have electronic settlements scheduled for 8 June 2020, alternative settlement arrangements will need to be made by each party’s legal practitioner. The Queensland Law Society has advised legal practitioners to discuss with clients the option of reaching agreement with the other party to extend or bring forward the date for settlement. Alternatively, transactions can be settled on 8 June 2020 using the traditional ‘in paper’ method on that day. Please note that this will only impact electronic settlements on 8 June 2020.
If you have facilitated a contract that is due to settle by electronic settlement on 8 June 2020, you should contact your client to advise of the above and confirm that their legal practitioner has made necessary arrangements.
The introduction of electronic settlements has transformed the property exchange process across Australia. Today’s consumers demand the ability to transact anywhere and at any time. And they expect digital innovation that’s both flexible and transparent. But what are the benefits for real estate agents?
Firstly, it provides for a greater certainty of settlement. The success of a property transfer is largely reliant on whether the conveyancing process plays out as initially planned. The largest determinant of a successful property transfer is whether settlement occurs at its intended time. However, delayed settlements are a common occurrence in Australia because each party must attend and have the correct documentation to finalise the transfer. Settlement can be delayed due to a number of reasons, including missing or incorrect documentation, parties held up at previous settlements or problems arising on the final property inspection. A delay means that settlement may be rescheduled later that day, or take a number of days to be rectified. With electronic settlements, it provides real-time progress updates, allowing all parties to more efficiently track the progress of a transaction and identify whether any documentation is outstanding and who is responsible for its submission.
Secondly, payable commissions are expedited. Have you ever waited days, even weeks to receive a cheque for your commission? Only to then wait for the cheque to cleared into your account? Instead of drawing cheques, electronic settlements pay funds instantaneously on settlement. Where the commission is required to be drawn from the sale proceeds, rather than deducted from a deposit you already hold, they’re transferred and appear as cleared funds in your account on the day of settlement.