Electronic lodgement of land dealings

The first of those changes is that all land dealings must be lodged electronically.

During the transition to 100% digital lodgement, some land dealings have been permitted to be lodged in paper form, provided that they were not a “Required Dealing” declared by the Registrar General pursuant to Rule 8.8 of the NSW Conveyancing Rules. From 11 October 2021, all land dealings will be declared a Required Dealing under Rule 8.8 of the NSW Conveyancing Rules.

Lodging land dealings in paper form will not be permitted from 11 October 2021, regardless of the date signed. All land dealings to be lodged with NSW Land Registry Services will only be able to be lodged electronically by a subscriber (for example, a lawyer, licensed conveyancer, or bank) to an Electronic Lodgement Network, such as PEXA. From 11 October 2021, amendments to the NSW Conveyancing Rules will be made to repeal those parts which refer to a paper process. The current Conveyancing Rules waivers which allow some paper dealings to be lodged will also be revoked as they will no longer apply from 11 October 2021.

What does this mean for you?

This means that on and from 11 October 2021, all dealings, regardless of the date signed, will no longer be accepted for paper lodgement. This may cause problems for those who have prepared a dealing some time ago, have arranged execution and stamping, but are yet to lodge it.

The current Conveyancing Rules waivers which allow registration of certain paper-based dealings will also be revoked and will no longer apply from 11 October 2021. There will be a very limited number of out-of-scope transactions which will be able to be lodged in a paper form and the registration process will alter slightly from 11 October 2021. A subscriber will still prepare the out-of-scope dealing in paper but will lodge it electronically as a PDF attachment to the electronic dealing, known as a “Dealing with Exception”. Once lodged, NSW Land Registry Services will examine the paper dealing.

Certificates of Title

Section 33AAA of the Real Property Act 1900 (“the Act”) gives the Registrar General power to declare a day on which Certificates of Title (“CTs”) will cease to be issued, known as “cessation day”. 

The Registrar General has declared 11 October 2021 as cessation day which means that on and from this day, existing CTs will be cancelled and have no legal effect and the Registrar General will no longer issue CTs. Existing CTs cannot be required to be produced to have a dealing or plan lodged for registration. Similarly, Authorised Deposit-Taking Institutions, such as banks, will no longer be issued with CoRD (control of the right to deal), which is the electronic equivalent of a CT.

What does this mean for landowners?

The three main changes for landowners are:

1. those who pay out their mortgage will not receive a CT from their bank
2. a cash purchaser will not receive a CT on settlement, and
3. when a plan of subdivision is registered and new parcels of land are created, CTs will no longer be issued for those parcels.

Landowners who currently hold a CT do not have to do anything before or after the cessation date. After that date the CT will no longer be a legal document.

Landowners who plan to deal with their land in the next six months should hold onto the CT because a transaction may begin before the cessation date but not yet be finalised. In this case, the CT may be needed to satisfy requisitions or other administrative notices that were issued prior to 11 October 2021.

Landowners who own unencumbered land who have someone else holding or storing their CT may wish to request to have it returned because from 11 October 2021, there will no longer be a remedy under the Act to get a CT back from another person, given it has no legal effect.

What does this mean for practitioners?

On and from the cessation date, practitioners will no longer need to ask their clients for their CT when acting on a sale or when lodging a dealing for registration and will no longer be requested to enter a Certificate Authentication Code for consent purposes in an Electronic Lodgement Network Operator’s workspace. Practitioners are advised to verify a client’s right to deal with property by sighting evidence which includes the name of the client as well as the relevant property details.

Currently, practitioners may be storing thousands of CTs in safe custody on behalf of clients. On the cessation date, some firms may wish to seek instructions from clients as to what to do with their CTs. Others may wish to just return CTs to their clients. Others may wish to do nothing or even destroy the CTs. All are viable options that a firm should consider.

If a firm is considering destroying a CT, it is strongly recommended that instructions are sought from the relevant client in the first instance. Despite the CT no longer being a legal document, it is still the client’s personal property and should be treated as such.

It will not be necessary for practitioners to stamp a CT as cancelled or mark it in any way if returning it to a client after the cessation date. Likewise, from 11 October 2021, the concept of a Certificate Authentication Code is redundant and is no longer required to be stored securely.

Mortgagee consent will still be required for the registration of certain dealings and express consent from a mortgagee in writing will be required to be uploaded onto the electronic workspace for lodgement with the NSW Land Registry Services.

Equitable mortgages and liens secured by possession of a CT will become less secure once CTs are abolished. Firms who are holding CTs as security for payment of costs are advised to urgently make alternate arrangements to secure their debt.

Protections in place when there is no CT

The Torrens Register is still the single source of truth as to a person’s interest or estate in land in NSW. All documents registered on the Torrens Register must be lodged by a practitioner who must verify the identity of their client and establish that they have the right to deal with land.

Introduction of an Information Notice

In all instances of property ownership, an Information Notice will issue which will include details such as the folio identifier, the registered dealings including registration numbers, the practitioner’s reference and the date of registration. It should be noted that an Information Notice is not a definitive statement of the state of the Register and a title search will be necessary to provide the most accurate and up-to-date information regarding the property.

Conclusion

Landowners and practitioners are encouraged to prepare for these changes, particularly for transactions where registration may occur after 11 October 2021. Consider any steps which should be taken with the CT for your personal property or where you are holding a CT by way of a lien, equitable mortgage or for safekeeping.

Further information / assistance regarding the issues raised in this article is available from the authors, Jim Griffiths, Partner, and Kellie Ross, Senior Associate, or your usual contact at Moray & Agnew.