With Queensland finally joining the ranks of other Australian states in mandating electronic conveyancing and waving goodbye to physical Certificates of Title, homebuyers should be confident that the risk of fraud during a property sale has been significantly minimised, writes Mieke Elzer, Property and Commercial Lawyer at Attwood Marshall Lawyers.
While eConveyancing has been an option to digitally prepare, sign and lodge title instruments for over a decade, it has only recently become mandatory in most states across Australia.
New South Wales has not accepted the lodgement of paper dealings since 11 October 2021.
And e-conveyancing has just been mandated in Queensland this year, with the phasing out of paper deed titles taking effect from 20 February 2023.
The shift from a very slow manual, paper-based process to a digital approach has meant the process of buying and selling property in Australia is more transparent, stress-free and efficient than ever before.
What is a Certificate of Title?
A Certificate of Title, also known as a title deed, is a formal legal document that records ownership of real property. The certificates, which were issued by the Registrar of Titles in NSW, Titles Queensland in QLD, and the Victoria Registrar of Titles in VIC, include a description of the land, the names of the owners (including whether ownership is distributed as ‘tenants in common’ or ‘joint tenancy’) and a list of all the registered interests on the land – such as covenants, caveats or mortgages.
Where a property is purchased using lender finance, the lender would retain the deed as security until the loan had been paid out.
Homebuyers not relying on lender finance however often look forward to seeing their name on a deed, which used to be handed over some weeks after the sale had been finalised and the Transfer registered. It has traditionally been viewed as a receipt of the purchase.
But the system is a historic one, and like any paper-based arrangement has been vulnerable to issues.
Deeds could be lost, misplaced, or damaged by property owners, with an arduous and costly process for replacing them. They could also be used in fraudulent transactions if stolen or if they fell into the wrong hands. An individual could for example use fake identification documents to pretend they are the registered owner on title of a property to borrow funds from a lender, only then to disappear.
When mandatory e-conveyancing was being floated, professionals cited various pros and cons for phasing out the old paper-based system, but most can now agree that the new digital system has reduced the risk for both buyers and sellers of manual errors, fraud and delayed settlement.
Recent case study of fraud
It’s heartbreaking to come across stories where an individual has lost out on their dream home or lost significant amounts of money because of a faulty or fraudulent property transaction. Particularly when the error that caused the problem could have been avoided with the right legal advice or electronic checks.
One recent horror story of a property purchase gone wrong involved a couple – Jess and Jackie Morecroft – who were recently forced out of their Gold Coast home after losing a five-year legal battle against the previous owner, 83-year-old Hind Issa.
The Queensland Supreme Court found that the house came to auction after a relative of Hind’s, who later defaulted, had unlawfully mortgaged the house as security for a loan. The relative had forged Hind’s signature when signing the loan documents.
After learning of the mortgagee’s intention to sell the property, Hind had placed a caveat on the house to prevent the sale from going through. But after pressure from the mortgagee, she agreed to remove the caveat in exchange for $40,000. Despite that agreement, Hind later contacted the Queensland Registrar of Titles to make them aware of the fraud. The Registrar then placed a second caveat on the property – preventing the registration of the Transfer to the Morecrofts.
Unaware of the second caveat, the Morecrofts handed over the settlement monies to complete their purchase, moved into the home, and were none the wiser that it did not in fact belong to them.
Six months later, Hind brought a legal action in the Supreme Court to get her house back.
After a five-year legal battle, the Court ruled in February this year that the house still belonged to Hind. The Court also found that while the Morecrofts did not have a legal interest in the home, they are entitled to recover damages from the mortgagee who sold them the property.
Further, the judgement held that the “State is liable … to compensate the purchasers as they have been deprived of their equitable interest in the property … because of the fraud of another person”. In April, the Queensland government was ordered to pay the couple $2.7 million in compensation to match the current value of the house – a decision the government is now appealing, only extending the dispute further and continuing to leave the Morecrofts in legal limbo.
How digital title deeds have changed the landscape
The shift to electronic conveyancing intervenes at multiple points of a property transaction to ensure that situations like the Morecrofts found themselves in do not occur.
To begin with, Electronic Lodgement Network Operators are under a strict mandate to conduct proper verification of identity reports on any client who has signed a registerable property dealing.
In the case of Ms Hind Issa, the mortgagee would have had to conduct a face-to-face interview with Hind to verify her identity and her signature before registering the mortgage.
When it comes to the Morecrofts handing over money in exchange for a Transfer Document that could not be registered, this would not occur on an electronic conveyancing platform. The Land Titles Office send though immediate notifications to all participants in the workspace as soon as there has been any change on the Title. That includes the lodgement of a dealing that is yet to be formally registered.
Prior to electronic conveyancing, a caveat that was lodged in paper form could take weeks to be registered. This meant it was possible to lodge registration of a transfer after settlement, without knowing there was a prior dealing first in line, also awaiting registration, that could potentially stop the transfer.
The onus, however, is still on legal representative to ensure that they have met all mandated requirements in their role as Electronic Lodgement Network Operators.
Entrusting your property transaction with an experienced property lawyer to help guide you through this process is key. A property lawyer will be able to assess the information that comes back, ask the right questions to resolve any discrepancies and give assurance to the whole process.
The necessity to perform all the relevant searches should not be understated, and this is often where buyers fall short in trying to save on conveyancing costs. Opting for cheap conveyancing services means cutting out some of the imperative checks and balances in the process.
Attwood Marshall Lawyers – Delivering fast and stress-free property transactions
At Attwood Marshall Lawyers we believe in doing everything possible to ensure property transactions are seamless and any risk of a delayed settlement is mitigated.
We know that buying and selling property can be extremely stressful. As a leading property law firm, we can 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 and their best interests are also protected. We perform electronic conveyancing for residential and commercial property transactions and take full advantage of the fast and secure platform.
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, Robina Town Centre, Southport, Kingscliff, Brisbane, Sydney and Melbourne offices. Book an appointment with the team instantly online now.