|
What is NECS?
NECS is a cooperative development between industry and all State and Territory governments to build a national electronic system to lodge and settle property transactions. NECS will be a single system built in such a way as to be usable for lodgment and settlement in every State and Territory. The outcome is expected to be a more efficient industry able to offer better, faster and cheaper services to buyers and sellers of real estate everywhere in Australia
What will NECS cover?
The system will provide a convenient electronic means for legal practitioners, conveyancers, banks and independent mortgage processors to:
- Prepare dealings and related instruments to register changes in ownership and interests
- Settle financial transactions (including payment of duties, taxes and any disbursements)
- Lodge their dealings with the appropriate Land Registry
- Receive
confirmation of dealing lodgment and registration.
What parts of conveyancing are not included in NECS?
The proposed NECS does not cover:
- Preparation and exchange of contracts for sale
- Re-settlement investigations
- Procurement of any insurances required by purchasers
- Creation of loan documentation
- Processes for examining and registering instruments once lodged with a Land Registry
These elements of conveyancing may be looked at in the future, but for now NECS is focused very much on the lodgment and settlement elements of conveyancing.
What will be a typical domestic conveyance using NECS
The NECS process is set out in detail in the NECS Operations Description (NOD). Please read the NOD or the fact sheets on the NOD and the NBM for an overview of the process.
What role does the land registry play in electronic conveyancing?
Land Registries will play a number of roles in NECS. Land Registries will set the accreditation requirements for users of the system to be permitted to become certifiers of instruments. LRs will populate the workspace with data once the subscriber has entered the jurisdiction, title references and the instrument type required. LRs will also conduct pre-lodgment and pre-settlement checks to ensure that an instrument will be acceptable for lodgment.LRs continue to maintain the indefeasibility of title on their Registers. This does not change under NECS.
Is NECS involved where no actual settlement is involved, but there is a lodgment required: for example, a simple discharge of mortgage?
Yes. In non-settlement transactions, the subscriber will undertake the same process for a settlement transaction minus the financial aspects of that transaction. The client’s subscriber will enter the required information about the property and instrument required and the Land Registry will pre-populate the instrument accordingly. Once the instrument has been certified and signed by the subscriber/s, the Land Registry verifies the digital signature, the accreditation status of the subscriber and the integrity of the data in the instrument. If any of these verifications fail, the Land Registry will not accept the instrument for lodgment and NECS is notified.
Will NECS be voluntary?
Yes, it will be voluntary to use NECS.
How will NECS take account of differences in conveyancing practice between different jurisdictions?
The main tenet of NECS is that it will be usable by all States and Territories. NECS will be specifically tailored to take into account differences between jurisdictions. All States and Territories will be involved in the design of the model and will provide the National Office with their requirements for the business rules of NECS, to ensure that NECS is usable in all jurisdictions. There will be some common rule sets which will be based on issues upon which all jurisdictions agree, and then there will be individually adjusted rules for each State and Territory.
Will the system be Internet-based?
Yes. The technology behind NECS will be based on XML data transfer, using a data standard developed through collaboration with LIXI (Lending Industry XML Initiative) Ltd, called the NEC Data Standard.
How will you manage problems with reliability? What happens if the practitioner’s internet access is down or there is a power failure when a settlement is due? Will the seller be able to terminate the contract and keep the deposit?
System reliability is an issue which has to be fully accounted for in all e-commerce environments. The typical way of dealing with this is to build in redundancies, that is, to build a mirror system as a back-up system which can be used in the event that the main system goes down. In developing the system rules, all the parties (lawyers, conveyancers, financial institutions and government) will agree to a procedure if the entire system and its back-up go down, based on what happens in the current paper-based system when settlements fail to go through.
If the system is compromised and fraud occurs, who will bear the risk?
This is one of the significant issues that needs to be resolved before electronic conveyancing can be implemented. An independent consultant has carried out an analysis of the risk allocation under the electronic system. This has involved extensive consultation with all relevant stakeholders. The independent consultancy has developed a framework for the allocation of risk in the electronic system which will continue to be reviewed by all stakeholders until the final regime is acceptable to those participating in it.
Who’s controlling the process? To whom is the National Office answerable?
There is a National Steering Committee which drives the process and which the National Office was set up to support. It is made up of representatives from every State and Territory land administration, the State and Territory revenue commissioners, the Law Council of Australia, the Australian Bankers Association, the Australian Institute of Conveyancers and the Information Brokers and Legal Stationers Association. Les Taylor is its independent chair.
What’s the timeline for NECS?
During 2007, we are continuing to develop the detail of the system with a build commencement date for 2008.
How long until the system is operational?
The NECS Implementation Strategy sets 2010 as the roll-out date for NECS. However the actual timing of NECS will depend on the Steering Committee’s decisions. The Steering Committee endorsed the National Business Model in March 2007 and have charged the National Office with developing the detail of the project and further refining the NBM. The National Office will continue with jurisdictional readiness and National Infrastructure Development.
What are the minimum technical requirements for practitioners' systems to be able to use NECS?
This will be finalized when we are in the build phase of the NECS. Currently we are still developing the final model for NECS. But generally speaking, practitioners will need to have at least a secure broadband Internet connection and if they are the Subscriber or Certifier to the NECS, they will require a digital signature certificate.
How much will NECS cost to use?
The fees to use NECS will be set as part of the financial modeling which the Office will conduct in 2007, once the model for NECS has been confirmed by the National Steering Committee. The commercial principles for NECS which will form to basis of modeling are set out in the proposed National Business Model.
What will be the status of paper certificates of title? Will they still be legal documents?
Paper certificates of title will not be used in electronic transactions. The role of paper certificates of title will be determined by each jurisdiction. This issue is being discussed in the Consultation Forums.
What rights and remedies will be available if a transaction is held up because of technological problems with NECS?
The National Office commissioned an independent risk assessment to establish the distribution of liabilities and concomitant rights and remedies according to the risk environment of NECS.
Will legal practitioners be running a higher risk?
The National Office commissioned an independent risk assessment to look at the risk environment of NECS.
Can higher risks be covered by insurance?
It has not been established that there will be higher risk under NECS. The independent risk assessment outcomes will help in addressing this issue.
Will the cost of higher risks be offset by the lower price of using NECS?
It has not been established that there will be higher risk under NECS. The independent risk assessment outcomes will help in addressing this issue.
How will the system be protected from hackers, viruses and intruders?
The NECS will use the best standards of data encryption and security available to protect against system corruption and intrusion.
What are “licensed service providers”?
LSPs roles are set out in the NECS Operations Description. LSPs will provide tailored user interfaces, integration and support services to Subscribers as an alternative to direct access to NECS.
What is a digital signature?
A digital signature is a secure electronic means of signing an instrument. When you sign using a digital signature, your identity is electronically verified as part of the process of being issued with a digital signature. Digital signatures used in NECS will be compliant with the Australian government’s Gatekeeper framework for digital signatures.
In the current paper- based process of conveyancing, legal practitioners, licensed conveyancers and financial institution officers prepare instruments and in most cases have their clients sign the documents in front of a witness who also signs. Practitioners rely on the person to certify the correctness of the information in the dealing by signing it in front of a witness. In electronic conveyancing, practitioners will use a digital signature which does not need to be witnessed as it incorporates an independent identity verification process.
Back to top |
|