2-1-2 = Paper vs. PEXA - Settlement Preparation Processes
Paper vs. PEXA Processes
Recently, I've been in the road assisting practitioners implementing PEXA and all that goes with it. One stand out across the board is the paper expectations for a electronic PEXA settlement, and the shift between the processes - they are different.....to a point!
But the easiest way to navigate yourself through this, is to mirror your document creation and financial preparation processes. So think, when would you follow up the receipt of the Transfer of Land from the Purchaser? When would you complete your statement of adjustments and draft your statement of account? When would you submit cheque direction to the mortgagee? These should not differ, just because you are settling in PEXA. But when you settle in PEXA you must also adhere to the Transfer Guidelines.
It's obvious that the way in which you communicate with parties, complete the financial settlement and prepare your documents differ! So, how do you make sure that you will be ready for settlement? It's the 2-1-2! What you need to check, confirm, sign and amend can be done within these times.
2 WEEKS PRIOR TO SETTLEMENT
1 WEEK PRIOR TO SETTLEMENT
2 DAYS PRIOR TO SETTLEMENT
2 WEEKS prior to settlement, you would:
start settlement packet, arrange a settlement time & venue with the other conveyancer, book in settlement with your mortgagee (if applicable), finalise your SRO Settlement Statement (if possible).
So, in PEXA:
- have all parties accepted invitations?
- have you sent conversations been sent in relation to preparation of documents ie. mortgages, transfers, discharges etc?
- have you sent a conversation to your incoming/outgoing mortgagee in requesting to loan funds & payouts?
- have you completed your SRO duties forms?
- have you prepared the transfer?
- have you received the CT from your client?
1 WEEK prior to settlement, you would:
ensure all documents have been signed by your client/s, confirm Statement of Adjustments, update the council, water, OC fees etc to be drawn at settlement, prepare your Statement of Account/Settlement Statement to your client, confirm amount being received from the lender (Purchase, funds available), request indicative payout figure from mortgagee (Vendor), call the money into your trust account for settlement (if required), ensure there is sufficient money at settlement (surplus/shortfall from client), finalise your SRO Settlement Statement (if possible).
So, in PEXA:
- have you completed Transfer & Notice of Acquisition?
- have you commenced your Settlement Statement?
- have you updated Destinations with payments to be made at settlement ie. your costs, council, water, OC fees etc?
- have you received the signed SRO Settlement Statement?
- can you finalise stamp duty?
- have you asked the mortgagee for an indicative payout figure?
- have you asked for the loan amount being advanced and shortfall authority?
- have you inciated the Source Account form, if applicable?
- have you prepared the Nomination, if applicable?
- have you entered the Source funds coming from your trust account?
2 DAYS prior to settlement, you would:
send off your settlement packet, send cheque directions to the purchase, send cheque directions to the mortgagee, confirm with your client the total funds at settlement, draw cheques from trust for settlement.
So, in PEXA:
- did you yesterday, instruct your client to deposit funds into the PEXA Source Account and update the amount?
(ALWAYS 3 BUSINESS DAYS CLEARANCE NEEDED ON ALL SOURCE ACCOUNT DEPOSITS - more information can be found here)
- have you signed all the documents?
- have you finalised all Destinations?
- have you sent a conversation to your incoming mortgagee, confirming all funds required for settlement?
- have you drafted a Destination for surplus funds back to your client?
- have you updated and confirmed all Sources?
- have you authorised Source Funds from your trust account?
By navigating through these above tasks, not only ensures that you will be on track for settlement, but reduces the amount of tasks you need to complete on settlement day. Obviously, you cant sign off on the FSS (Financial Settlement Summary) until the Sources & Destinations balance, which is generally the day of settlement - but if they do balance, nothing is stopping you!
If everyone would be able to mirror these processes we would all be #bettertogether.