By Russell Cocks, Solicitor
First published in the Law Institute Journal
Proof of ownership of land has traditionally been linked to a document. Prior to the advent of the Torrens system of land ownership, proof of ownership depended entirely on possession of all prior documents establishing a chain of title and transfer of ownership was achieved by the addition of another document to that chain. The Torrens system simplified that process but still relied on documentary evidence to establish ownership.
The Transfer of Land Act is the statutory foundation for the Torrens system and that Act created an official record of ownership, being the ‘original’ certificate of title retained by the Registrar as a folio of the Register Book and a copy or duplicate certificate of title held by the owner as proof of ownership. The Land Titles Office has been moving away from this paper based system progressively over 20 years and whilst the fundamental principles of Torrens have been retained, reliance on paper has been diminished.
A major signpost in this change was the conversion of the original certificate of title from paper form to a computer based record and the consequent removal of reference to the ‘duplicate’ certificate of title. The document held by the owner to establish ownership was thereafter simply known as the certificate of title but the Act still required production of the certificate of title before the great majority of dealings could be registered. The production of the certificate of title was therefore part of the process of ‘making title’ that harked back to the obligation to produce the chain of title in pre-Torrens days.
Electronic conveyancing has now progressed to the stage that the need to produce a paper title as part of that process cannot be accommodated. To undertake an electronic conveyancing transaction the paper title (pCT) must be converted to an electronic title (eCT) and once that conversion has occurred the Registrar is not required to produce a replacement paper title unless requested to do so (s 27B). Ultimately, all paper titles will be replaced by a digital record in the Register and proof of ownership will be established by a printout of the Register. Hence the need for a strict Verification of Identity protocol.
What then of the requirement to ‘make title’? The relationship between a vendor and purchaser is principally governed by the contract of sale of land and most sales have adopted the standard contract. This in turn has adopted many of the principles developed by the Common Law; such as the doctrine of fixtures and principles relating to misdescription and liability for notices. The requirement to ‘make title’ in previous versions of the standard contract was reflected in conditions that required the vendor to ‘produce all documents necessary to allow the purchaser to become the registered proprietor’ but the current contract requires the vendor to ‘do all things necessary to enable the purchaser to become the registered proprietor’, thus removing the need to produce a document.
To fulfill this contractual obligation where the title has been converted to an eCT the vendor must ensure that the eCT will be available at the Titles Office for the purpose of registering the proposed transfer of land and associated transactions. This is achieved by an Administrative Notice undertaken in the electronic environment whereby the eCT is nominated by the party in control of the eCT to be available for registration of the forthcoming instruments.
A Register Search Statement obtained by a purchaser prior to settlement will confirm this nomination and that the vendor has thus fulfilled the contractual obligation to ‘do all things necessary’ to allow the purchaser to become registered. If the transaction is being conducted as a paper settlement, the RSS will note that the eCT has been nominated to a paper instrument and the stamped Transfer is lodged at the Land Titles Office in the normal way after settlement to meet up with the eCT and be registered. In the ordinary course, a paper title will not issue after registration of that dealing and the title will remain an eCT under the control of the registered proprietor or mortgagee.
Electronic conveyancing has been a long time coming, but it is now coming with a rush. The bulk conversion of some 2 million titles held by the major banks in October 2016 means that many more transactions will involve eCTs. Fundamental principles have been massaged to accommodate the digital world and practitioners will need to understand the changing landscape to be able to continue to service the needs of their clients.
Tip Box
Whilst written for Victoria this article has interest and relevance for practitioners in all states.