No more paper

The Registrar-General has recently announced changes to the land title 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 11 October 2021 are:

• the cancellation of paper certificates of title (CTs) and removal of the requirement to produce a CT for a land transaction; and
• electronic lodgement of all land dealings, including leases.

Certificates of Title – New South Wales

From 11 October 2021, all existing paper CTs will be cancelled and have no legal effect. Paper CTs have always been a duplicate of the title, with the original title held by the New South Wales Land Registry Services (NSW LRS), originally in paper form in the Volume / Folio books and later in electronic form as a folio of the Register (a Folio Identifier or Auto-Consol).

If a landowner holds a paper CT, no action needs to be taken in response to this change and that CT will no longer have legal effect. The guidance from the Registrar‑General is that landowners with a CT who plan to deal with their land should retain the CT (even after 11 October 2021) to comply with any requisitions or outstanding notices which are not yet finalised.

If another party holds a paper CT on a landowner’s behalf, the landowner may wish to request for the CT to be returned. Paper CTs have not been issued to Authorised Deposit‑Taking Institutions (ADIs or effectively banks / building societies and credit unions) since the mass conversion of mortgaged titles to electronic titles or eCTs in September 2018. The remedy in the Real Property Act 1900 (NSW) where a court may make an order for the return of the CT to NSW LRS to give effect to any court order will no longer apply on the basis that the CT has no force or effect.

No new CTs will be issued from 11 October 2021. Instead, on completion of a land transaction NSW LRS will produce an information notice confirming registration of a dealing. On a subdivision or consolidation of land, a new folio of the Register will be created, but no CTs will be issued.

The Torrens Register continues to reflect ownership and interests in land. In line with current practice, lawyers and conveyancers must verify the identity of their client and confirm the client’s right to deal with the land. Representatives will no longer need to request the paper CT from their client to carry out a land transaction or produce the paper CT for registration.

Electronic lodgement of land dealings – New South Wales

From 11 October 2021, all dealings must be lodged electronically and no paper dealings will be accepted by the NSW LRS.

Dealings are lodged by lawyers, licensed conveyancers or banks, each of whom are required to be subscribers to electronic lodgement networks.

The recent introduction of an electronic lease will streamline the process for registration of leases. The electronic lease is created by the representative for the landlord, including a new lease cover page with prescribed particulars. The terms and conditions of the lease are signed by both parties in paper form in accordance with current practice, and a scan of the signed terms is uploaded to the electronic workspace. In particular, the parties to the Lease must still sign the paper form in accordance with the current execution requirements. The landlord’s representative then signs the electronic lease in the electronic workspace and lodges it for registration with NSW LRS. Leases with a term of 3 years or less (including any option) are not required to be registered, in line with the existing legislation.

CTs (and the related control of the right to deal or CoRD) will cease to have effect from 11 October 2021, and mortgagees will no longer be required to produce CTs or make available the CoRD to register a lease. While CTs have been abolished, the parties to a lease should still seek the consent of any mortgagee before the lease is registered so that the lease is valid and binding on the mortgagee. That consent is uploaded to the electronic workspace with the lease, and included on the Torrens Register.

The lease once registered will be referred to in the title search in the usual way, and a copy of the registered lease will be publicly available in the same way that a paper lease can be searched and obtained from NSW LRS. Any consent obtained from a mortgagee will be attached to the registered lease. The fact alone that the lease is registered will no longer imply that the mortgagee (who had the CoRD of the title) consented to, and is bound by, the lease.

The shift to 100% electronic lodgement of land dealings in New South Wales means that parties to land transactions must engage lawyers and licensed conveyancers to register dealings. Those representatives must hold up to date verifications of identity and establish a client’s right to deal with the interest in land.

Author: Sara Ayoub.