With one mandate deadline for electronic lodgment of land dealings remaining, and the decision of Guirgis v JEA Developments Pty Ltd [2019] NSWSC 164 handed down by Kunc J in February 2019, Thomson Reuters author, lecturer and sole practitioner Greg Stilianou reflects on his career and managing risk when engaging in online property transactions.
Read on for his legal commentary, starting off with an overview of Greg’s participation in the legal profession to date…
Background
Since leaving the land titles office in January 2019, I have been teaching at The College of Law in their property practice Masters and Practical Legal Training programs. In my role I need to be at the forefront with the evolution of property law in practice. I’m grateful for the knowledge and experience that I gained from working at the land titles office, with both the Government agency and the private operator. I feel honoured and fortunate to now be in a position where I can provide the legal profession with my insights, not only through Thomson Reuters’ Baalman & Wells Land Titles Office Practice (LTOP) and my teaching, but also as a consultant through my legal practice, Greg Stilianou Legal.
When I started writing for the LTOP service in early 2016 my objective was to ensure the commentary assisted practitioners to successfully interact with the land titles office. Now with the movement of risk to private practitioners engaging in online property transactions, and having transitioned to private practice myself, I believe I am in the best position to know what subscribers need from LTOP and deliver it.
Electronic lodgment networks (ELNs)
ELNs are the domain of the legal profession and soon we will see the Registrar-General publish a list of land transactions (Required Dealings) that must be lodged electronically. This requirement forms part of the latest version of the Conveyancing Rules and relates to the final electronic lodgment mandate commencing 1 July 2020. It is expected that the list of Required Dealings will capture most, if not all, of the remaining land dealing types, the intent being that all land transaction dealings must be lodged electronically.
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Electronic land transactions: What are the risks?
Assessing compliance with land titling laws
The Real Property Act 1900 now provides that certain statements, caveats, notices, applications and other information in support of land dealings can be verified in a way approved by the Registrar-General, as an alternative to providing a statutory declaration. This amendment is a sign of things to come. It is anticipated that, instead of the Registrar-General satisfying itself about the registrability of land dealings based on statements etc that would normally accompany a paper dealing, practitioners will be required to satisfy themselves. Practitioners will give a certifying statement to the Registrar-General in relation to that evidence when electronically lodging dealings.
Example: Instead of lodging an Application for a Possessory Title with statutory declaration evidence for the Registrar-General to examine and consider whether or not the applicant has adversely possessed land for the requisite period of time, a legal practitioner may be required to do that assessment and make a verifying or certifying statement in relation to that assessment in favour of the Registrar-General.
The Participation Rules are presently under review. I expect the certification about holding satisfactory evidence in support of the land transaction to be amended to be more robust and operate as the alternative to providing a statutory declaration in favour of the Registrar-General.
The shift to legal practitioners assessing compliance with land titling laws is continuing and research to minimise these risks is required. LTOP is not just about how to successfully interact and obtain registration with the land titles office, it assists practitioners in successfully assessing the quality of evidence that would otherwise be lodged for assessment by the land titles office.
RELATED: Electronic Deeds: Recent Developments in NSW
Guirgis v JEA Developments Pty Ltd
The days of lodging a land dealing and waiting for the land titles office to send a requisition to inform and educate us about what’s wrong with the documents are numbered. Along with the statutory amendments mentioned above, we saw in Guirgis that the Court has little patience for practitioners who do not apply the same scrutiny to land transactions in the electronic environment that they do in the paper environment. In both mediums, the objects of the transaction are the same; the only difference is the mechanism. It’s important to note that the mechanics in the electronic environment place a greater role on practitioners.
“The requirement to give the requisite representations and certifications operates to confer on (practitioners) the role of a guardian at the gate”
– Guirgis per Kunc J, at [39].
To be a property practitioner means we now, in addition, have to be compliance officers for the land titles office. Guirgis is an important reminder to the profession to embrace technologies that make our practices efficient with caution. Our role is to scrutinise the content of the screens the ELN presents for clicking and signature – to assess whether the checkbox, certification or statement can be appropriately given.
The practitioner will be responsible for the transaction, the ELN will not.
3 tips to help property law practitioners manage risk
- Double check everything: The lesson from Guirgis is to scrutinise the content on the screens that your ELN presents to you and assess whether you can make the certifications and statements that are required for the particular transaction.
- Collegiate support: ELN operators (PEXA and Sympli) offer an online platform for lodgment of land dealings and financial settlement, and their offerings are expanding. But like any online service, each provider’s platform will differ, not just from a design perspective, but also from functionality, ease of use and service support. Whilst the legal profession is a collegiate profession, often property law practitioners work on one side of the fence. We need to support each other in navigating these new technologies. This co-operative approach achieves client objectives and enables practitioners to comply with the conduct rules.
- Be flexible: Adopt a flexible approach to property transactions. Embrace technology with an appropriate level of caution, but do not resist change. New technology has disrupted all businesses and industries – the legal profession is not immune. The recent legislative changes to property transactions are a sign that further change will be inevitable. Keep up, or risk falling behind.
What can we expect to see happen next?
- Certificate of Title: One of the biggest issues that electronic conveyancing brought with it was the status of the certificate of title. Long recognised as the indicia of a person’s right to deal with land, this has been replaced by the eCT/ CoRD (control of the right to deal). Recently, the Office of the Registrar-General published a paper announcing it will follow the Queensland model of wholly eradicating the certificate of title – both paper and electronic. This is going to require further amendments to the Real Property Act 1900. Watch this space.
- Interoperability: As electronic conveyancing continues to develop, so too does the market for becoming an ELN operator (ELNO). PEXA was the first established ELNO, followed by Sympli, with more on the horizon. The next issue that this brings is if the vendor uses one ELNO, and the purchaser use a different ELNO, how will the two ELNOs operate in conjunction with the other? Earlier this year the Registrar-General published a directions paper on a proposed interoperability regime. From a practitioner’s perspective, the regime needs to cast no burden on the profession. The Registrar-General makes Operating Requirements for becoming an ELN and therefore any requirements ought to dictate that an ELN must arrange its technology to communicate and participate with any other ELN that enters the market. The interoperability needs to be seamless. Just as there are no restrictions on transferring money between accounts of different banks, so too there can be no restrictions on transacting with land between subscribers of different ELNs.
Reflecting on the last few years, we’ve seen the land titling functions of the Registrar-General placed in the hands of a private operator and we’re approaching the final mandate for lodging land dealings electronically. As the laws developed, they have gotten more complex, detailed and layered to deal with the staged transition to electronic land transactions. To get to this point the Electronic Conveyancing National Law was enacted and adopted as law in NSW. Various amendments to the Real Property Act 1900 and other land titling laws have been made, and new sets of rules in the NSW Participation Rules, the Conveyancing Rules and the Lodgment Rules have been created.
Now that the objective is almost complete, I would not be surprised if the final chapter for the Torrens title system was a full-scale review of all land titling laws to consolidate the electronic land titling system into a centralised law (one Act, one Regulation). If the laws are remodelled, I remain ready to tackle that monumental task of updating Baalman & Wells Land Titles Office Practice.
