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If you're after information to provide your customers, you can direct them here: https://www.pexa.com.au/pexa-residential-seller-guarantee
PEXA has introduced the PEXA Residential Seller Guarantee (PRSG) to provide protection to sellers of residential property in the event of certain kinds of fraud. Where the PRSG applies, the seller has the option to make a claim against PEXA, rather than seeking to recover the loss by an alternative means
PEXA understands that buying and selling a home is an emotional time for your customers and we appreciate the stress that can be felt when things don’t go to plan. We’ve listened to you and we’re committed to those who use our platform and the clients you represent.
As your digital property exchange platform, we understand the role we play in maintaining the security of the network. Accordingly, the PRSG has been introduced to provide protection to sellers in the event of certain kinds of fraud.
The PRSG only applies in respect of the sale of residential property. The following circumstances must also be satisfied:
(a) The seller provided the seller’s practitioner with payment instructions (i.e. bank account details).
(b) The seller’s practitioner accurately entered those bank account details into the PEXA platform.
(c) After (b) a fraudster gained access to the PEXA platform and changed those bank account details.
(d) After (c) the practitioner approved the settlement (including the changed bank account details) by digitally signing the financial settlement schedule by applying their personal digital certificate and PIN.
(e) Upon settlement, the relevant funds were paid into the fraudster’s bank account, and not to the seller’s bank account.
(f) Within 3 business days of settlement (or such longer period as PEXA in its absolute discretion will allow), both the seller and the seller’s practitioner signed and lodged the PEXA claim form with PEXA. This form can be found here.
If any of those circumstances do not exist, then the PRSG will not apply.
The PRSG does not cover the situation in which the seller’s instructions were intercepted, with the result that the practitioner entered the fraudster’s bank account details into the PEXA platform. Email is not necessarily a secure method of communication, therefore practitioners should confirm all account details by some other means of communication.
The seller will need to complete and sign the Claim Form. The seller’s practitioner is also required to sign the Claim Form as it contains warranties that are intended to confirm the existence of the set of circumstances required for application of the PRSG. The Claim Form must be received by PEXA within 3 business days of settlement (or such longer period as PEXA in its absolute discretion will allow).
The claim form can be found here. The Claim Form can be submitted to PEXA by email to email@example.com.
If each of the conditions for making a claim are satisfied, PEXA agrees to make the payment under the PRSG within 10 business days of receipt of the claim form by PEXA.
The PRSG does not apply where the seller is a commercial vendor, such as a developer. The reason for this is that a commercial vendor will not be made homeless as a result of a fraud which the PRSG is intended to cover. Also commercial vendors are carrying on a business and should be better able to protect themselves vis-à-vis their practitioner compared to a non-commercial seller.
Furthermore, the PRSG does not apply where a mortgagee or other third party is exercising a power of sale (ie. ATO, confiscation orders, sheriff etc.). Again, a mortgagee or third party exercising a power of sale will not be made homeless as a result of a fraud which the PRSG is intended to cover. Payments in these cases will not generally be paid directly to the proprietor.
The maximum liability of PEXA under the PRSG is $2 million in respect of a single settlement.
Assuming all the conditions are satisifed and subject to the $2 million cap, PEXA will pay the following:
(a) The amount of the “vendor’s funds” paid to the fraudster’s bank account which have not been recovered, returned or frozen by the receiving bank at the time the payment is made by PEXA;
(b) Interest on that amount from the date of settlement until the date of payment by PEXA payable at the published RBA cash rate; and
(c) Where the fraud has resulted in the seller failing to settle on a purchase of another residential property on the due date, rescission notice fees, reasonable accommodation expenses, penalty interest, reasonable legal costs and additional storage and removalist costs.
If your loss is greater than $2 million, your client should carefully consider whether to make a claim under the PRSG, or whether instead to take steps to recover their loss by some other means. If your client makes a claim under the PRSG, PEXA will have certain rights. In particular, PEXA will have the right (to the exclusion of your client) to take action in your client’s name to recover the loss and may compromise or settle any such action on such terms as PEXA sees fit. Accordingly, unless PEXA agrees otherwise, you are not entitled to take action to recover the amount of your loss above $2 million.
Moreover, if PEXA recovers any amount after making a payment under the PRSG, PEXA is entitled to retain the amount so recovered up to the sum of:
(a) the amount paid by PEXA under the PEXA Residential Seller Guarantee;
(b) plus any interest recovered on that amount;
(c) plus an amount equal to any costs (including without limitation administrative, recovery agent, funding and legal costs) which PEXA has incurred in taking any recovery action, before paying the excess (if any) to your client. This could mean that your client recovers less in aggregate than your client’s total loss.