The Abolishment of Certificate of Titles
The Registrar-General has recently announced changes to the land Titles system in New South Wales in a significant move toward 100% electronic lodgement of dealings for land transactions.
The Key changes to the Real Property Act 1900 (NSW) from the 11th October 2021 are:
- The Cancellation of paper Certificate of Titles (CTs) and removal of the requirement to produce a CT for a land transaction; and
- Electronic lodgement of all land dealings, including leases.
This welcome change represents the final reforms for the NSW Land titles system to be 100% electronic, which is faster and more secure than the traditional paper process.
What is a Certificate of Title?
A Certificate of Title is a paper document issued by the land registry recording the owner of the property and other interests and dealings on the property title. Our land titles system (Torrens title) provides for registration on the land registry as conclusive evidence of ownership. Despite this, certificates of title had been used as a means of reducing the risk of fraud in a paper transaction system and as security for financing arrangements. Like many traditional procedures in property law, advancements in technology have effectively made it obsolete.
How Certificates of Title were used
The original CT is often required to be presented to NSW Land Registry Services (also known as the Land Titles Office) when registering documents that affect the title of your property. This includes when registering the documents that finalise the transfer of the title of your property, or when selling your property.
The other common way that your CT may have been used in the past is to have it deposited with a lender (often a bank) when borrowing money against a property. The lender retains the CT as security for your mortgage. The lender would hold the original as evidence of having an interest in your property after taking a mortgage over it. It would also provide the lender with control over what other documents were registered on title. For example, a bank would not want a second mortgage registered on title without their prior approval.
Non-bank lenders (such as the bank of Mum and Dad) may also have held the original CT as security for repayment of their loan, so the property would not be transferred or mortgaged without their knowledge.
Transition to electronic Certificate of Titles
The transition to electronic CTs has been underway for several years now. Paper CT’s that were held by banks as securities for mortgages have already been converted to electronic CT’s. This final stage will finalise the conversion of all paper CTs that do not have a mortgage to a large financial institution on title, to electronic CT’s.
If you currently hold your paper CT by October 2021 it will simply become a piece of memorabilia.
What safeguards are in place in an electronic transaction system?
The land registry makes electronic title searches available in a quick and cost-effective way to anyone wanting to verify ownership records. Land dealings (such as transfers of title when a property is sold) are now registered online using electronic settlements platforms. Subscribers to the electronic settlements platforms (Solicitors, Conveyancers, and Banks) are effectively the gatekeepers to registering dealings on the land registry and have strict compliance requirements including the obligation to verify the identity of anyone wanting to deal with land.
Why Abolish Paper Certificate of Titles?
Abolishing Certificates of Title will make transactions easier and a better experience for consumers. Where original Certificates of Title have been held by the owner (i.e. where there is no mortgage), the owners or their family often have no idea where the original is located and is often lost. This has meant that there is typically a time-consuming and expensive process to go through to have a Certificate of Title cancelled and reissued.
If a paper CT fell into the wrong hands, then it could be used in fraudulent transactions. There have been numerous examples of criminals using fake identification documents to pass themselves off as the owners on title of a property and then borrow funds from a lender only to be never seen again.
The Future of Certificate of Titles
The change to electronic CTs will not change your ownership of your property, and evidence of your ownership of a property will still be recorded on the Torrens Title Register (“the Register”). For many property owners, the transition to electronic CTs will have little noticeable effect.
After completion of the transition of all titles in NSW to electronic format, your title will become a virtual record in an electronic register called the Register and your printed CT will no longer be legally valid. If you sell your property, it will be transferred to the new owner’s name via a process of electronic conveyancing on the PEXA platform (Property Exchange Australia), which is already widely used in Australia.
The change to electronic CTs presents an issue for non-bank lenders who hold the original CT but have not registered a mortgage on title to secure the loan. For these non-bank lenders, including any parents who have loaned money to their children, steps should be taken now to ensure the loan is adequately secured.
Is your information on the Register correct?
Have you changed your name since you became a registered property owner, by marriage, or by any other reason?
Have you updated your name on the Register managed by the NSW Land Registry Services?
Or perhaps the property is still in your or your spouse’s maiden name?
It may be the time to make an application to update your name on the Register before paper certificates are no longer valid.
What we can do for you?
Hunter Legal & Conveyancing are experienced in all facets of electronic conveyancing and can assist with selling or purchasing property, a refinance, a transfer of title, or assisting you to update your name on the Register.
Simply contact us today on 1300 224 828 and let us make it easy on you.
For more information please refer to https://www.registrargeneral.nsw.gov.au/property-and-conveyancing/eConveyancing/abolition-of-certificates-of-title.