Certificates of title / title deeds and eConveyancing

 

 

On 11 October 2021 there will be 2 big changes to the land titles system in NSW: certificates of title will be abolished and all land dealings will be required to be lodged electronically. We give a run down on what this means.

The story

First – quick history. We’ve all heard of certificates of title or title deeds. Title deeds were an important part of the old system of title for land that the British brought to Australia. Essentially, land owners had (often fancy) bits of paper, called deeds, that recorded the chain of ownership of the land and proved how they became the owner. Sometimes the deeds could trace the ownership all the way back to a grant from the Crown. It was a slow and difficult way to administer land ownership that probably made a lot of lawyers rich, but apart from that, wasn’t very good.

In 1863 a clever South Australian, Sir Robert Torrens, came up with a new way of doing things – a central land register operated by the state that is conclusive evidence of ownership. If your name is on the register, you own the land. The new system was so good that lots of other countries decided to adopt the new “Torrens Title” system. With the Torrens system, there was no need for the title deeds to demonstrate a chain of title. However, the state register would issue a new certificate of title each time when something changed on the register. The certificate of title would be issued to whoever had the right to deal with the land: usually the owner, but, also the bank if there was a mortgage. The holder of the certificate of title would need to “produce” the certificate to the registry before any new dealing would be registered.

One of the problems with this system was that the certificates of title went missing, a lot. Mainly when the banks had them. And this caused a lot of confusion and delay. It was also a slow and insecure system. A transaction might happen on a Monday in Wagga Wagga and it might take days or weeks for the original signed documents to make their way to Sydney for registration.

Over the last 5-10 years there has been a move to electronic lodgment of dealings using an Electronic Lodgment Network Operator. This has seen paper certificates of title become increasingly obsolete.

Shoot forward to 2021 and the decision has been made to get rid of certificates of title once and for all. On 11 October 2021, existing certificates of title will be cancelled and no new certificates will be issued. The register will be the only evidence of land ownership. From the same date all dealings will be lodged electronically. No more bits of paper.

What’s it mean for you?

For landowners, this means that if you hold a certificate of title, it will no longer have any value, except as a keepsake. It also means that if you have a mortgage, you won’t get a certificate of title in the mail when you pay it out. A bit of an anticlimax…

For people dealing with land whether it be buying, selling, taking a mortgage over, leasing etc, it means that you can’t deal with the registry directly. You need to see a lawyer or conveyancer who is a subscriber to an Electronic Lodgment Network Operator.

For lawyers, it means that we have a heightened responsibility. We will need to be extra careful with identifying clients and getting evidence like rates notices to prove that you are who you say you are and that you have the right to deal with your property.

What you need to do

In most cases, there’s nothing you need to do. But there is one main exception. If you are holding a certificate of title as security for an equitable or unregistered mortgage, you need to get in touch with your lawyer, right now. That document will provide no security value to you after 11 October and you will be at risk.

Final comment

The digitisation of property ownership and administration in NSW might have some saying “so what?”. But for property law nerds like us, it’s a monumental moment in the history of Australian property law. It finally realises Torrens’ vision of a single, central source of truth when it comes to land ownership. And goes it further: now it can be updated almost instantly even if the transaction happens a day’s horse ride from Sydney.

If you’re concerned or interested in how this change might impact you, please don’t hesitate to get in touch.