In New South Wales, Certificates of Title (“CTs”) will be cancelled and no longer issued, and paper dealings have ceased to be accepted for lodgment from 11 October 2021, explains Attwood Marshall Lawyers Property Lawyer Raphaelle Worrall.
Mandating electronic conveyancing couldn’t come at a more appropriate time, with the COVID-19 pandemic pushing property prices to a whole new level and igniting the real estate industry. With property selling in record time, it only makes sense to ensure the conveyancing process is as efficient and streamlined as possible and allows for speedy transactions without delay.
What is a Certificate of Title?
A Certificate of Title (CT), also known as a Title Deed, is a formal legal document evidencing ownership of real property issued by the Registrar of Titles in NSW.
The transition from paper CTs to electronic CTs (eCTs) commenced in September 2019 when paper CTs held by financial institutions as securities for mortgages were converted to electronic format. From 11 October 2021, the necessary change for a completely electronic process will abolish paper CTs, completing the transition to 100% eConveyancing in NSW.
Abolishing the old paper-based system
Evidently in this digital age, the transition from paper to electronic conveyancing was foreseeable. However, there were also issues raised with the old-fashioned paper-based method which had a likely impact on the switch to electronic conveyancing.
The top 3 issues many people face when lodging paper Certificates of Title include:
- A lost cause: Certificates of Title being frequently lost, misplaced, or damaged by property owners. The process of obtaining a replacement CT can be arduous and requires an application accompanied by evidence outlining what happened to the original document and what steps were taken to locate it. This can be a relatively long, painstaking, and costly process as a result of misplacing or damaging a single page document.
- Deceased Estates: CTs or older produced title deeds can often be difficult for an executor of a deceased estate to locate, adding extra steps in the process for an executor to have to complete when administering the estate. This can cause unnecessary delay and stress not only for the executor of the estate, but for the beneficiaries as well.
- Fraud: Paper CTs could be used in fraudulent transactions if the document was stolen or fell into the wrong hands. There have been previous cases where individuals have used fake identification documents to pass themselves off as the registered owners on title of a property to borrow funds from a lender only to disappear.
A significant case where this took place was the Australian Rugby House fraud matter, where a group of fraudsters forged the Certificates of Title to a property owned by the Australian Rugby Union in North Sydney. The fraudsters used the forged Certificates of Title and engaged a mortgage broker to obtain a mortgage of $14.4 million. They intended to use the mortgage to purchase 605 kilograms of gold bullion from a gold dealer. The fraudsters made it all the way to the point where the funds were advanced to them, however their suspicious activity was realised and ultimately their transaction was reported to the police just prior to the gold bullion being delivered.
The future of Certificates of Title in NSW and the impact on property owners
For many property owners, the transition to electronic CTs will have little to no noticeable effect. The change to electronic CTs will not change your ownership of your property, and evidence of your property ownership will continue to be recorded on the Torrens Title Register.
After the paper titles to electronic transition is complete, a homeowner’s title will become a virtual record in an electronic register called the Register. Any paper CTs will lose their legal validity. If someone sells their property in the future, the title will be transferred to the new owner’s name via electronic conveyancing, known as Electronic Lodgement Network (ELN) on a platform called PEXA (Property Exchange Australia). PEXA is a widely used system in Australia, and one that Attwood Marshall Lawyers have used primarily for residential conveyancing since being certified in May, 2018.
Electronic conveyancing, or eConveyancing, refers to settling a conveyancing transaction through an electronic lodgement network (ELN). Currently, PEXA, which prepares electronic dealings and verifies lodgement acceptability, is the only ELNO used in Australia. E-Conveyancing replaces the need for settlements to occur on paper, making transactions occur more smoothly and accessibly for all parties. In the shift towards a paperless process, NSW mandated electronic settlements from July 1st, 2019.
Applications for a replacement Certificate of Title
In view of the changes coming into effect rom 11 October 2021, if anyone intends to request a replacement Certificate of Title, even if it is only for sentimental purposes, applications for replacement CTs must be lodged by 6 October 2021. NSW Land Registry have states that they cannot guarantee that applications lodged on and from 7 October 2021 will be registered in time before the Real Property Amendment (Certificates of Title) Act 2021 comes into effect.
How does Queensland compare?
In 1994, the QLD Titles Registry stopped automatically issuing paper Certificates of Title for property as it moved to an electronic register. From 1994, a paper CT could only be obtained from the Titles Registry on request from a property owner. Up until 1 October 2019, the laws that governed paper CTs required paper CTs to be deposited where there was an original Certificate of Title held, in property transactions.
From 1 October 2019, property owners were no longer able to request a paper Certificate of Title from the Titles Registry and paper CTs no longer have legal effect.
To summarise, currently in QLD and from 11 October 2021 in NSW, Paper Certificate of Titles will be of sentimental value only.
Paper settlements still effective in Queensland
Queensland is still trailing other states and territories as the state hesitates to mandate the use of electronic conveyancing. Paper settlements are still utilised by some practitioners who are hesitant to develop their skills and embrace change and digital technology.
A paper settlement occurs at a physical location, usually either at the seller’s financier office, or the seller’s solicitor’s office. Four parties commonly attend at a time mutually agreed: the seller’s solicitor and financier (if any), as well as the buyer’s solicitor and financier (if any).
Prior to the COVID-19 pandemic, the majority of settlements in QLD occurred via paper. However, due to lockdowns and social distancing measures, the shift to paperless settlements has been swift with the majority of settlements now occurring via PEXA for the firms and practitioners that are accredited to use the platform. Electronic conveyancing remains the preferred method.
PEXA – Pros and Cons
eConveyancing is the new standard across Australia and will only continue to evolve and become even more sophisticated over the coming years.
We take a look at some of the pros and cons of transaction property electronically:
Funds are cleared instantly – Usually once a matter has settled on PEXA, funds are cleared into party’s bank account on the same day. While bank cheques in paper settlements take up to 3 business days to clear.
Flexible settlement time – Settlements can be booked from as early as 11am, and if all parties are not ready the matter will automatically be pushed back in 30-minute intervals, until the matter is complete or up until 4pm being the cut-off time. With a paper settlement, you cannot typically settle prior to 2pm.
Execution of transfer documents – Paper settlements require all sellers to physically sign a wet ink signature on the Transfer documents. The original form is then required to be presented at settlement. This can become problematic or inconvenient if the original transfer is lost or has been incorrectly signed and requires to be re-signed or if the seller is located interstate or overseas. Electronic settlements allow the seller’s solicitor to execute the same transfer documents on behalf of their client online.
Familiarity – Solicitors have been settling via paper for years and as electronic settlements are not mandatory in QLD, some practitioners are not willing to upskill and convert to the more streamlined and accessible eConveyancing method.
Subscription – All parties to the transaction must be registered to settle electronically within PEXA. Currently, only a percentage of law firms in QLD have adopted electronic conveyancing and are registered to transact on the platform.
Attwood Marshall Lawyers – Delivering fast and stress-free property transactions
It appears that COVID-19 may be the catalyst that Queensland needed to convert to electronic conveyancing. In our experience, the majority of practitioners including our experienced team, are requesting PEXA settlements and taking advantage of the streamlined and customer-centric process to ensure property settlements happen on time.
It appears it will only be a matter of time until eConveyancing is mandated in Queensland. At Attwood Marshall Lawyers we believe in doing everything possible to ensure property transactions are seamless, and any risk to delay settlement is mitigated so that properties can settle without fuss.
This is why we prefer PEXA conveyancing for most property transactions.
We know that buying and selling property can be extremely stressful. As a leading property law firm, we handle all aspects of conveyancing and keep our clients updated every step of the way so that they can have peace of mind in knowing their transaction will proceed smoothly.
For property and conveyancing advice, contact our team any time by calling Property and Commercial Department Manager, Jess Kimpton, on direct line 07 5506 8214, email email@example.com, mobile 0432 857 300.
Our Property and Commercial Lawyers are available at our Coolangatta, Kingscliff, Robina Town Centre, Brisbane, Sydney and Melbourne offices. Need assistance outside regular business hours? Our Robina Town Centre office is also open Thursday nights until 9pm and Saturday mornings until 12noon.