Posted on April 16, 2014 by
Certificates of title to be a creature of the past – or so it seems …
Proof of ownership of land is not the certificate of title (CT). Rather, it is the recording in the Registrar General’s folio. The CT is, if you like, merely a memo recording what exists on the folio of the Register, the latter being the true record. As electronic conveyancing becomes a reality, the truth of this legal proposition is becoming more evident.
On 8 October 2013, electronic conveyancing commenced in New South Wales. Currently it is limited to mortgage lodgement and discharge. It is only available to subscribers of Property Exchange Australia (PEXA), generally specialist conveyancing firms and larger banks, but increasingly used by solicitors and finance providers. Ultimately, anyone doing any significant conveyancing and land dealing transactions will be a PEXA subscriber.
Land & Property Information New South Wales (LPI) has introduced an option to regulated financial institutions (RFIs) allowing them to ask that no CT be issued for land. Currently this means that banks holding a first registered mortgage can ask that no paper CT be issued.
From September this year, it is proposed that caveats, transfers and financial settlements will be added to the transactions that can be done on-line electronically with little or no paperwork.
How do I know if there is no CT for a lot?
Where a bank or financial institution has asked LPI not to issue a CT, the folio of the register shown on a property search will contain this notification immediately above the description of the land:
NO CERTIFICATE OF TITLE HAS ISSUED FOR THE CURRENT EDITION OF THIS FOLIO. CONTROL OF THE RIGHT TO DEAL IS HELD BY…..
Usually the party nominated will be the bank, and a quick look at the Second Schedule will show a mortgage to the bank or organisation referred to in the notice.
This bank (or RFI) which holds the first registered mortgage is said to hold the control of the right to deal (CoRD). The CoRD holder can determine whether a CT issues and how the property in question is dealt with.
How do I record dealings where a CT has not issued?
- A Council wants to register a voluntary planning agreement on, or a lease of land with no CT.
- A developer wants to lodge a plan of subdivision of land with no CT.
When you had a paper CT, you needed to go through the process of asking the mortgagee to produce the title at LPI. The difference now is that you will ask the CoRD holder to issue a CoRD Holder Consent through PEXA. This Consent must specify all plans and dealings to which all the parties have consented. The CoRD holder can specify that even after registration of the new dealing, plan, lease or VPA, that no new CT will issue.
There will be an additional search which lodging parties can perform to see if the CoRD holder consent has issued, and if so, in what terms.
Advantages of the procedure
Ultimately the procedure will be easier than the current where titles are ‘produced’ which is to say, left at LPI until all the associated dealings arrive for registration. The paper CT process has the disadvantage that valuable documents, including CTs, can go missing. It is also time consuming.
Paper CTs for production are currently kept at LPI for 3 months in the hope that all dealings and consents will find their way to the right officer and the new dealing will be registered. The new electronic process should be quicker and involve less chance of fraud. It should also be less costly for banks and lenders as they will not have to physically recover the CT and send it to LPI.
As electronic conveyancing becomes the norm, fewer and fewer paper CTs will issue. The CT will not be seen as the proof positive of the ownership of land. Under Torrens Title it never was, but the perception will likely equate with the reality in the future.
You can read the LPI Circular here.