Changes to the land title system
On 11 October 2021, new changes to the land titles system in NSW will be introduced that will transition NSW away from paper-based processes.
The Real Property Amendment (Certificates of Title) Act 2021 makes several changes to legislation, importantly allowing for the cancellation of certificates of title (CTs) and progressing NSW to 100% electronic lodgment of land transactions.
There are two significant changes from 11 October 2021:
- the cancellation of CTs and the control of the right to deal (CoRD) framework; and
- all land dealings must be lodged electronically. This is referred to as ‘100% eConveyancing’.
Key changes from 11 October 2021
Certificates of title
Existing CTs will be cancelled and CTs will no longer be issued. 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, which is the electronic equivalent of a CT.
The Torrens Title Register has always been and will continue to be the single source of truth as to the ownership of a person’s home.
There are three main changes from the current practice for landowners:
- Those who pay off their mortgage will not receive a CT as was traditionally the case.
- A purchaser of property without the need for a mortgage (aka “cash-buyer”) will not receive a CT.
- When a plan of subdivision is registered, and new parcels of land created, CTs (or CoRD) will no longer be issued for those parcels.
In all instances an Information Notice will issue, which will confirm the dealings registered and date of registration.
Landowners of unencumbered land (i.e. no mortgage) who have a CT don’t have to do anything before or after 11 October 2021. After this date the CT will no longer be a legal document.
Landowners with a CT who plan to deal with their land in the next six months should hold onto the CT, even after 11 October 2021. This is because a transaction may begin before this date, but not yet be finalised. In this case, the CT may be needed to satisfy requisitions or other administrative notices that were issued before 11 October 2021.
Those who own unencumbered land, but have someone else holding or storing their CT, may wish to request to have it back. From 11 October 2021 there will no longer be a remedy under the Real Property Act 1900 to get a CT back from others, given it has no legal effect.
From 11 October 2021 lawyers and licensed conveyancers (together, representative subscribers) will no longer need to ask their clients for a copy of their CT when acting on a sale or when lodging a dealing for registration.
Subscribers will no longer be requested to enter the CAC (Certificate Authentication Code) details taken from a CT for consent purposes in an Electronic Lodgment Network Operators (ELNO) workspace.
Representative subscribers are advised to not use a CT as the sole source of evidence for the purposes of establishing their client’s right to deal with the land. Further guidance on establishing a client’s right to deal with land can be found on the ARNECC website.
Where a subscriber has relied on a CT to establish right to deal in a transaction conducted before 11 October 2021, the CT, or a copy of it, must be retained in line with the requirements for retaining supporting evidence in the NSW Participation Rules.
Currently, representative subscribers would be storing thousands of CTs in safe keeping on behalf of their clients. When CTs are cancelled, some firms may wish seek instructions from their clients on what to do with their CT. Others may want to just return CTs to their clients. Others may want to take the ‘do nothing’ approach, or even destroy them. All are viable options a firm should consider.
If a firm is considering destroying a CT it is recommended that instructions are sought from the 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 is not necessary for representative subscribers to stamp a CT as “cancelled” or mark it in any way if returning it to their client after 11 October 2021. Likewise, previous advice was to keep the CAC secure. From 11 October 2021 the concept of the CAC is redundant and is no longer required to be kept securely.
Mortgagee consent will still need to be obtained for the registration of certain dealings (refer to the Registrar General’s Guidelines). Previous reliance on CoRD holder consent or production of title does not substitute for express consent from the mortgagee to be bound by the terms of the dealing (as opposed to consenting for the title to be used for registration).
For example, when acting for parties to a lease of mortgaged property, if the mortgagee is to be bound by the terms of the lease, the Subscriber acting for the landlord will need to request an express consent from the mortgagee in writing and upload that onto the electronic workspace for lodgment with the land registry.
Equitable mortgages and liens
Equitable mortgages and liens secured by possession of a CT will obviously 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. For more information please see Important changes to liens and equitable mortgages.
Banks will no longer be issued with a CoRD holder notification when their mortgage is registered on the Torrens Register. All recordings relating to CoRD holders will be removed from the Torrens Register on 11 October 2021.
Banks will no longer be asked to provide 1st or 3rd party CoRD holder consents when the mortgagor wants to lodge a dealing for registration. This includes where the mortgagor seeks to lodge subsequent mortgages.
Customers of banks whose mortgages are discharged will not receive a CT when they discharge their mortgage. Instead the bank, as the lodging party, will receive an Information Notice which they should pass onto their customers.
Banks will no longer be asked to provide CoRD holder consent in the workspace.
The Torrens Register is the single source of truth as to a person’s interest or estate in land. All documents to be registered on the Torrens Register must be lodged by a subscriber, who must verify the identity of their client and establish that they have the right to deal with the land. Lawyers and licenced conveyancers are subscribers who can represent clients to prepare and lodge dealings.
In all instances of property ownership, an Information Notice will issue.
Details that will be on an Information Notice include the folio identifier, the dealing(s) that were registered including their registration number(s), the subscriber's reference and the date of registration.
As an Information Notice is not a definitive statement of the state of the Register, a title search of the Register (which can be obtained on payment of a fee) will be necessary to provide the most accurate and up to date title information regarding the property.
Lodging land dealings in paper will not be permitted from 11 October 2021. All land dealings to be lodged with NSW LRS can only be done electronically by a subscriber (e.g. a lawyer, licensed conveyancer, or bank) to an Electronic Lodgment Network.
You will need to see a lawyer or conveyancer who is a subscriber to an Electronic Lodgment Network (ELN) to prepare and lodge dealings that are to be registered on the Torrens Register.
Most lawyers and licensed conveyancers that deal with property law are already registered as subscribers.
A subscriber must follow strict obligations, such as verifying your identity, establishing that you have the right to deal with the subject land and that they have your legal authorisation for them to carry out the work on your behalf. Failure to do so may result in the subscriber being suspended, terminated, or otherwise disciplined by their regulator.
Most banks have been transacting digitally for several years and are already subscribers. The removal of paper from the system should see further efficiencies. However, there may be scenarios where a transaction is out-of-scope and will need to be prepared and lodged in the method described in out-of-scope transactions below.
One identified scenario which is out-of-scope is the document known as ‘Memorandum’, which is often lodged by a bank. Memorandums are out-of-scope for the moment because they have no title reference, however they may be lodged using the method described for out-of-scope transactions below.
From now until 11 October 2021, there will be a number of changes made to remove the paper process from the rules and legislation. The following will be made with an estimated timeline:
- Update to Conveyancing Rules – mid July
- Proclamation of Real Property Amendment (Certificates of Title) Act 2021 – end of July
- Revocation of Conveyancing Rules waivers – end of August
- Update to Lodgment Rules – end of August
We will continue working with stakeholders to ensure the cancellation of CTs and the transition to 100% eConveyancing is seamless.
Check back here to find more information as it becomes available.
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