PEXA and implications regarding trust money
ACT law firms completing NSW conveyancing matters will be aware that they are required to register with PEXA, the Property Exchange Australia company that provides and operates the PEXA Electronic Lodgement Network.
All ACT law firms with an ACT trust account should have their ACT trust account registered with PEXA to complete any NSW conveyancing matters.
ACT firms who do not have their own trust account will need to register to use the PEXA Source Account.
The PEXA Source Account is maintained by PEXA with an authorised deposit-taking institution within the meaning of the Banking Act 1959 (Cwlth), and the account is used by PEXA to receive and hold funds that are paid into that account for use in a settlement of a conveyancing transaction using the PEXA Electronic Lodgement Network.
If a law firm does not have their own trust account and funds provided by the purchaser are deposited into the PEXA Source Account, these funds are recognised as Power Money, as the law firm is being given the authority by the purchaser to disburse the funds pursuant to the purchaser’s instructions. For the vendor’s solicitor, funds received into the PEXA Source Account will be disbursed under the authority of the vendor’s solicitor pursuant to the vendor’s instructions. In both situations, the funds are then recognised as Power Money and therefore trust money, which will need an External Examination Report prepared each trust year, regardless of the fact that the law firm may not have their own trust account.
Effective from 17 June 2019, the ACT Council have invoked Section 81 of the Regulations to allow an exemption from the need to lodge an external examiner’s report if the only Power Money received in a trust year was in relation to PEXA (or through any future electronic conveyancing platform), with the following conditions:
- A law firm without a trust account which registers to use the PEXA Source Account (or any future electronic conveyancing platform) must notify the Society to qualify for the exemption.
- If a firm without a trust account, does not notify the Society, then an external examination report will need to be provided for each particular trust year.
- The exemption will apply until 30 June 2020, unless revoked earlier.
The law firm must still maintain a Register of powers and estates pursuant to section 61 of the Regulations.
In summary, along with section 67 of the Regulations, a law practice’s trust records are not required to be externally examined if the only trust money received or held by the law practice during a trust year is either or both of the following:
- Transit money
- Money received into or held in a PEXA Source Account (or any future electronic conveyancing system which may be available).
Further information regarding Power Money can be found on the Society’s website.