100% eConveyancing in NSW

There are three main changes from the current practice for landowners:

1. Those who pay off their mortgage will not receive a CT as was traditionally the case.
2. A purchaser of property without the need for a mortgage (aka “cash-buyer”) will not receive a CT.
3. 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 be issued, 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 after 11 October 2021. After this date the CT will no longer be a legal document.

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.

Conveyancing changes

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.

Clients CTs

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 to 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, lessee or chargee consents

Consents will still need to be obtained for the registration of certain dealings (refer to the Registrar General’s Guidelines). A helpful guide has been prepared listing the electronic dealings which require written consents, along with a suggested consent template which can be used by banks, lessees, or chargees. 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 was 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 be issued.

Details shown 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.

All dealings, regardless of the date signed, will no longer be accepted for paper lodgment. This may cause hardship to those who have prepared the dealing some time ago and are yet to lodge it. However, the properly completed and signed paper dealing can still be lodged with NSW LRS, using the method described below for out-of-scope transactions.

The decision to make a hard cut-off is related to security of the system and ties directly into the cancellation of CTs and CoRD.

The same applies to old discharge of mortgages signed years ago; or transfers that clients had forgotten about and hadn’t been presented for lodgment in years. All these dealings can be lodged using the method described for out-of-scope transactions below.

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.

About 1% of transactions are currently out-of-scope for eConveyancing due to technical reasons. NSW LRS and the ELNOs continue to work behind the scenes to gradually reduce the out-of-scope transactions, which could take several years.

From 11 October 2021, out-of-scope transactions are dealt with through the use of an electronic dealing known as ‘Dealing with Exception’.

A subscriber will still prepare the out-of-scope dealing in paper, however, will lodge it electronically as a pdf attachment to the ‘Dealing with Exception’. Once lodged, NSW LRS will examine the paper dealing.

The Lodgment Rules specify the requirements for using the Dealing with Exception. The Lodgment Rules exceptions list specify the scenarios where the Dealing with Exception can be used. NSW LRS has provided comprehensive guidance on how to use that dealing.

How to complete the electronic lease

The electronic lease only requires the landlord’s legal representative in the electronic workspace.

The landlord’s representative creates the electronic lease form and, from that, can generate a PDF rendition of the lease front page to provide to the lessee. The parties execute the lease terms and conditions as they do now (what has been, until now, an annexure to the lease front pages). Once the landlord’s representative has received the signed lease terms and conditions, a scan of this document is uploaded as the “Conditions and Provisions” in the workspace. It is then attached to the electronic lease form and the whole document is electronically signed and lodged (note that if the tenant’s representative is the lodging party then the paper lease form 07L will need to be uploaded in a different manner to be specified in the Lodgment Rules).

Practical considerations to assist practitioners to prepare electronic leases

• From 11 October 2021, all Certificates of Title (CTs) and Control of the Right to Deal (CoRD) were abolished. This means that the parties no longer require the mortgagee to provide a CoRD holder consent to register the lease.
• Even so, parties should continue to seek a mortgagee’s written consent to the lease before it is registered, so that the mortgagee will be bound to the lease: 53(4) of the Real Property Act. That written consent is then uploaded in the workspace and registered on the Torrens Register.
• Electronic leases experience a significantly lower rate of requisitions to fix errors compared to leases lodged in paper. Less requisitions means quicker registration, allowing the tenant to secure the benefit of the registered lease more promptly.
• The electronic lease makes it easier for the lease to be registered as the electronic workspace is directly connected to NSW Land Registry Services.
• Having leases registered on the Torrens Register is important for the protection and security of tenants, whether they are a small business leasing a retail shop, or entities leasing large commercial premises.

More information about electronic leases can be found at NSW Land Registry Services.