State electronic conveyancing rules not uniform

The emerging electronic conveyancing market may have hit its first speed bump with the release of the South Australian Registrar-General's proposed policy for identity verification. The South Australia draft does not follow the model proposed by the e-conveyancing regulator, the Australian Registrars' National Electronic Conveyancing Council.

The Mortgage and Finance Association of Australia has sent a submission to the South Australia Government pointing out that its draft limits the use of verification procedures to mortgagees that are authorised deposit-taking institutions.

The electronic property exchange, PEXA, is scheduled to begin its initial phase of operation next month, when state land registries and large banks will start to transfer electronic titles and make financial transfers.

The system will become fully operational over the next two years, as small financial institutions, lawyers and conveyancers come on board.

Last month, ARNECC published proposed participation rules, which include the verification of identity rule. The rule says that a mortgagee must take reasonable steps to verify the identity of the mortgagor.

According to Gadens Lawyers, the rule does not specify a standard. This means that mortgagees should be able to use their established anti-money laundering verification processes.

Gadens Lawyers' partner, Jon Denovan, said the South Australian draft limits the ability to use the verification procedure to mortgagees that are ADIs.

Denovan said: "This is an inappropriate restriction."

He said there were other instances of bias in favour of ADIs in the draft. For example, when a mortgage is discharged, mortgagees have to be identified unless they are ADIs.