In our previous BLOG we discussed the recent reforms which made changes to Conveyancing for Real property. Here we will be discussing the pending reforms such as the Verification of Authority, Client Authority and the Abolition of duplication Certificate of Title.
Note: The Real Property (Electronic Conveyancing) Amendment Bill 2016 that supports the introduction of Electronic conveyancing will take effect from Monday 4th of July.
Pending Reform #1: Verification of Authority or Right to deal “VOA”
One of the pending reforms is the Verification of Authority process (“VOA”).
The VOA is intended to reduce the risk of a land being dealt with by a party who has no right or entitlement to deal with the land.
The VOA is closely linked to the VOI in that it takes the verification process one step further to verify that the person now identified has a verified right or entitlement to deal with the land.
When the VOA becomes mandatory, it is anticipated that most prudent Legal Practitioners and Conveyancers will conduct the VOA at the same time as the VOI interview.
In order to verify a party’s authority or right to deal, reasonable steps must be taken. Reasonable steps will require the party to be verified to produce supporting evidence that includes the name of the person being verified and the details of the property or dealings detail.
Supporting evidence may be originals or copies or records of:
•Duplicate certificate of title for the property [although refer pending reform#5 – the abolition of duplicate titles],
• A current local government rates notice,
• Current utility bills for the property,
• A current land tax assessment notice for the property,
• Loan documentation,
• Mortgage documents granted by the mortgagor (if one exists),
• Contract of sale for the property,
• Power of Attorney if the person is dealing under authority as an Attorney,
• Trust deed if the party is a trust,
• Probate Registrars Certificate, Grant of Probate if under authority as an Executor,
• Marriage Certificate or Change of Name Certificate if the transacting party’s name differs.
In addition to supporting evidence, a search of the LTO Register would usually be undertaken to check who is named as a registered interest holder to ensure the correct person’s right to deal is being verified. Furthermore, if the party is a Company or an incorporated association, additional searches may be required to be undertaken to verify that each person signing is an authorised officer.
It is likely that there will be additional costs associated with the VOA process. It is also likely that the costs associated with any further searches (e.g.: LTO, ASIC, Council etc.) will be passed on to the person being verified.
Pending Reform #2: Client Authority “CA”
A Client Authority (“CA”) is a document that enables a party to a dealing concerning land (a paper based conveyancing transaction) to authorise a Licensed Conveyancer or Australian Legal Practitioner to act on their behalf. Ideally the CA should be completed at the same time that the VOA takes place.
The extent of the authority granted under a CA includes:
• signing registry instruments or other documents on behalf of the party,
• presenting registry instruments or other documents for lodgement with the LTO on behalf of the party, and
• authorising or completing any associated financial aspects of the dealings.
The CA is a prescribed form and cannot be altered or incorporated into any other form or document. The CA must be kept as a separate document and is therefore required to be completed and signed in addition to any usual client retainer or costs agreement or authority to act. The CA must be kept for at least 7 years.
CA’s are required as part of the necessary reforms in preparation for electronic conveyancing because access to the electronic conveyancing system will only be granted to Subscribers. Subscribers are a person or entity authorised to use an Electronic Lodgement Network (“ELN”) to complete conveyancing transactions of behalf of another person and will include Licensed Conveyancers and Australian Legal Practitioners.
This means that any members of the general public wishing to deal with land by way of the ELN will need to engage the services of a Subscriber to do so. All Subscribers must hold a CA authorising them to act on their client’s behalf before acting either in relation to a single transaction, a specified period of time or in respect of a batch of conveyancing transactions.
A blank Client Authorisation in the prescribed form may be downloaded here for reference [http://www.arnecc.gov.au/].
Pending Reform #3: Abolition of duplicate (paper) Certificate of Title (“CT”)
The capacity for a person or Mortgagee to produce a duplicate CT has been one of the primary means of establishing a right to deal with the land or an interest in the land. In fact, for the average home owner, being able to pay off the mortgage and collect the CT off the bank was the realisation of a dream and indisputable evidence of outright ownership.
Unfortunately, duplicate CT’s have also been one of the primary forms of evidence of ownership relied upon for frauds and will be inconsistent with electronic conveyancing. For both these reasons the practice of issuing duplicate CT’s will cease once the reforms come into effect.
In addition to duplicate CT’s no longer being issued, any existing duplicate CT’s presently held will cease to have legal effect once the reforms come into effect. Practically this means that the duplicate CT’s can either be destroyed or retained but will no longer allow the holder to use it to prove legal ownership.
A few things will flow from this reform:
• The Lands Title Register will be the only source of accurate information as to legal ownership and accurate descriptions of interests in the land,
• The Lands Title Register will be the sole point of reference for all dealings with land,
• CT’s will no longer provide sufficient evidence of ownership or right to deal,
• The Lands Titles Office will issue Certificate of Confirmation of Registration in relation to any dealings with the land (in lieu of duplicate CT’s). See sample Certificate of Confirmation of Registration at the bottom of the page, and
• Banks (and other Mortgagees) will no longer be required to produce the title for discharge of mortgages
It is anticipated that there will be a four month transition period from the operative date of the pending reforms during which time registry instruments may be lodged in the pre-reform format with pre-reform witnessing, execution and certification. Land transactions that may be held up or require lodging of registry instruments after the four month transition period will be required to be lodged in the new format (although the Registrar-General has discretion in extraordinary circumstances).
For further information, please contact the author.
This article is posted in Adelaide, South Australia by Tri-meridian Corporate & Commercial Law and is intended to be used as a guide only. It is not, and is not intended to be, advice on any specific matter. We do not accept responsibility for any acts or omissions resulting from reliance upon the content of this article. Before acting on the basis of any material in this article, we recommend that you consult your professional adviser.