obiter | ByLawyers News and Updates

Title reform – Conveyancing – NSW

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Title reform – involving the cancellation of certificates of title and other changes to the NSW land titles system – commenced on 11 October 2021. Certificates of title are abolished and the Torrens Register is the single source of truth as to a person’s interest or estate in land. All documents to be registered on the Torrens Register must be lodged by a subscriber, who must verify the identity of the client and establish that they have the right to deal with the land.

These significant changes were introduced in part by the Real Property Amendment (Certificates of Title) Act 2021. The Act provides for the cancellation of certificates of title (CTs) and progression towards 100% electronic lodgment of land transactions.

Title reform  – Cancellation of certificates of title

From 11 October 2021:

  • All certificates of title have been cancelled and will no longer be issued.
  • Existing CTs cannot be required to be produced to have a dealing or plan lodged for registration.
  • Practitioners no longer need to obtain a copy of the CT from their client for a property dealing.
  • Banks are no longer issued with ‘control of the right to deal’ (CoRD) and all recordings relating to CoRD holders have been removed from the Register.
  • Banks can no longer be asked to provide CoRD holder consent in a workspace when a mortgagor wants to lodge a dealing for registration, including a subsequent mortgage.
  • Mortgagee consent still needs to be obtained for the registration of certain dealings.
  • Subscribers are no longer requested to enter the CAC (Certificate Authentication Code) details taken from a CT for consent purposes in the workspace. The concept of the CAC is redundant and is no longer required to be kept securely.
  • Where a subscriber has relied on a CT to establish a right to deal in a transaction conducted before 11 October 2021, the CT or a copy of it must be retained, in line with the requirements for retaining supporting evidence in the NSW Participation Rules.
  • Otherwise, firms holding CTs in safe custody after commencement of this title reform have the following options:
    • seek instructions from each client on what to do with their CT;
    • return all CTs to clients;
    • take a ‘do nothing’ approach.

It is not necessary for firms to stamp a CT as cancelled or mark it in any way if returning it to their client.

Information Notice

From 11 October 2021, in all instances of property ownership, an Information Notice will issue. Details on this notice will include the folio identifier, the dealings registered including registration numbers, the subscriber’s reference and the date of registration. As an Information Notice is not a definitive statement of the state of the Register, a title search will be necessary to acquire accurate title information.

All land dealings must be lodged electronically

From 11 October 2021:

  • Lodging land dealings in paper is no longer permitted. All land dealings are to be lodged with NSW Land Registry Services electronically by a subscriber to an Electronic Lodgment Network such as Sympli or PEXA.
  • The Lodgment Rules specify when out-of-scope electronic dealings can depart from the usual manner of preparing an electronic dealing.
  • Paper dealing prepared before 11 October 2021 can still be lodged with NSW Land Registry Services electronically. They are uploaded as a PDF attachment to the electronic dealing known as ‘Dealing with Exception’. Once lodged, NSW Land Registry Services will examine the paper dealing.

All By Lawyers NSW Conveyancing & Property publications have been updated to reflect these changes.

Purchasing off the plan – All states

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To assist practitioners advising clients who are purchasing off the plan, new precedents have been added to the By Lawyers Purchase of Real Property guides in all states.

The two new precedents for practitioners advising potential purchasers are:

  • Initial letter to proposed off the plan purchaser; and
  • Enclosure – Considerations when purchasing off the plan.

The Enclosure is designed to be provided to clients who are considering buying off the plan. It provides plain language information about:

  • What ‘off the plan’ means.
  • The risks of purchasing off the plan.
  • The advantages of purchasing off the plan.

All the pertinent considerations for a client looking at entering into a contract to buy a property off the plan are covered. Importantly, the potential risks are clearly explained, including:

  • Being locked in until the sunset date.
  • Potential for loss if the market deteriorates between the day of sale and the settlement date.
  • Special conditions that operate in the developer’s favour.
  • Possible dissatisfaction with finished product.
  • Changes to the building.
  • Additional legal costs being involved.

Both new precedents can be found in folder A. Getting the matter underway, on each Purchase of Real Property matter plan.

These helpful new precedents were created in response to a request from a By Lawyers subscriber.

Purchasing off the plan – VIC

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To assist practitioners advising clients who are purchasing off the plan, a new precedent has been added to the By Lawyers Purchase of Real Property (Vic) guide.

The Enclosure – Considerations when purchasing off the plan provides a potential purchaser with plain language information about:

  • What ‘off the plan’ means.
  • The risks of purchasing off the plan.
  • The advantages of purchasing off the plan.

The enclosure covers all the pertinent considerations for a purchaser before entering into a contract to purchase an off the plan property. The potential risks are clearly stated, including:

  • Being locked in until the sunset date.
  • Potential for loss if the market deteriorates between the day of sale and the settlement date.
  • Special conditions that operate in the vendor’s favour.
  • Possible dissatisfaction with finished product.
  • Changes to the building.
  • Changes to the owners corporation.
  • Additional legal costs being involved.

A related new precedent ‘Initial letter to proposed off the plan purchaser’ has also been added.

Both new precedents can be found in folder A. Getting the matter underway on the Purchase of Real Property (Vic) matter plan.

This helpful new precedent has been created by our Victorian property author Russell Cocks. It was developed in response to a request from a By Lawyers subscriber.

Family law property dealings – FED

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For the assistance of practitioners conducting family law property dealings, a new folder has been added to the By Lawyers Family Law publication. Commentary and precedents are available to assist family law practitioners at the point of a matter where real property needs to be transferred between the parties.

The new folder is called If required – Real property dealings. The commentary and precedents within the new folder are extracted from the By Lawyers Conveyancing and Property publications. They provide guidance and the necessary forms and precedents to verify the client’s identity to the relevant standard for electronic lodgments of transfers and dealings with real property.

The new folder contains the following precedents and commentary required for the electronic settlements process:

This useful content has been added to the Property Settlement guide and the Financial Agreements guide. The new folder can be found in Finalising the matter on both matter plans. The location of this new content reflects the fact that family law property dealings are typically effected upon finalisation of the matter.

Family law practitioners are reminded that the commentary in both the Family Law Property settlement and Financial agreements guides cover the considerations and procedure for transfers of real property in family law matters. The By Lawyers 101 Family Law Answers reference guide also provides helpful information which includes valuing real property in the family law context, stamp duty implications of real property transfers in family law, together with coverage of capital gains tax and foreign resident withholding payments.

This enhancement arises from feedback from a By Lawyers subscriber. We value such feedback and always love to hear our users. Don’t hesitate to get in contact: askus@bylawyers.com.au

Community titles – WA

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A statutory regime creating community titles has been introduced in WA.

The Community Titles Act 2018 commenced in full on 30 June 2021.

The principal object of the Act is to facilitate the subdivision of land into parcels for separate development or disposition, with an interest in associated land in the nature of common property. The separate parcels can then be further subdivided.

The Act permits a single parcel of freehold land to be subdivided in a way that creates up to 3 tiers of schemes in one community scheme. Each scheme has its own community corporation. A community corporation is similar in function to a strata owners corporation. It is established on registration of the scheme. Each scheme also has its own set of by-laws to govern it and the common property.

The Act enables the creation of community titles (land) schemes and community titles (building) schemes within a community scheme.

Community title usually applies to large estates. These can sometimes include more than one residential lot as well as commercial and retail lots. The management of community title schemes can be complex. They can often span large areas of land with mixed – potentially  conflicting – uses. One issue that should be borne in mind by practitioners acting for purchasers of residential units in a property subject to a community title scheme is that there can be by-laws for both the strata scheme and the community titles scheme which apply to the lot the client is purchasing.

Much like strata titles, community title schemes are managed by committees and meetings. The community scheme committee deals with day-to-day issues and general meetings are held for more substantial issues.

These amendments bring WA property law into line with most other Australian states.

The commentary in the By Lawyers Conveyancing (WA) publication has been updated. It now includes details of how community schemes are created and operated, with specific commentary on:

  • Community development statements;
  • Scheme documents and registration;
  • Functions of a community corporation; and
  • Buyer information requirements.

Conveyancing To do lists – All states

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The By Lawyers Conveyancing To do lists have been enhanced. As a result of recent feedback from a subscriber, space has been added next to the checkboxes in the Sale of Real Property and Purchase of Real Property guides. This extra space can be used to enter the date that a task has been completed, or any other note relevant to that particular aspect of the matter’s progression.

This small but important enhancement to the utility of these popular precedents will be extended to other guides in due course.

To do lists precedents are available in most By Lawyers guides. They reside within Folder A. Getting the matter underway on the matter plans and are an essential matter and risk management tool.

The Conveyancing To do lists chronologically set out the usual steps to be completed in a sale or purchase matter and allow team members working on the file to tick off each step as the matter progresses. This ensures that nothing important is missed. It also assists with seamless continuity when multiple people are working on a matter. These documents can be of particular assistance to team members who are unfamiliar with a particular area of law, or when assigning a task to more junior staff and assessing their progress or providing training.

To do lists can be printed out and attached to the file for manual completion, or ‘pinned’ to the top of the LEAP matter and competed electronically.

In order to pin a To do list to the top of the correspondence window in a LEAP matter, simply right-click on the precedent after it has been saved into the matter and select ‘Pin to top’. It will then stay at the very top of all correspondence in the matter as a handy reminder and reference tool.

By Lawyers love feedback from subscribers! If you have a suggestion or request, please don’t hesitate to get in contact: askus@bylawyers.com.au.

Contracts subject to finance – Conveyancing – NSW

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New commentary and precedents for Contracts subject to finance have been added to the By Lawyers New South Wales Conveyancing Purchase of Real Property publication.

As a result of a suggestion from a By Lawyers user, we have updated the Purchase of Real Property (NSW) Guide with a new section of commentary and a folder of precedent letters.

The commentary now includes a section titled Contracts subject to finance, which discusses the increasingly common situation where a purchaser has not secured unconditional finance approval before exchange. Practical information is included on:

  • negotiating the inclusion into the contract of a special condition making completion subject to finance;
  • the effect of unsuccessful finance applications;
  • seeking an extension of time from the vendor where necessary;
  • serving written notice where finance falls through;
  • the requirement of the purchaser to not otherwise be in default when ending a contract;
  • continuing without unconditional approval;
  • forfeiture of deposit and damages – including negotiating a reduced amount.

The following new precedents to assist with contracts subject to finance have been added to Folder C. NEGOTIATIONS & EXCHANGE > IF REQUIRED – CONDITIONAL CONTRACTS:

  • Letter to vendor’s solicitor confirming contract unconditional;
  • Letter to vendor’s solicitor requesting extension of time; and
  • Letter to vendor ending contract.

At By Lawyers we pride ourselves on the cooperative and collegiate relationship we have with the many firms using our commentary and precedents daily. We value the feedback that we receive as it helps us continue to improve our publications, as in this instance. We love to hear from you!

Retirement villages – NSW

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Following recent changes to the Act, the Retirement Villages Amendment (Asset Management Plans) Regulation 2021 and the Retirement Villages Amendment (Exit Entitlement) Regulation 2021 have now commenced.

Asset management plans

The regulations require operators to maintain an asset management plan for each village they manage or operate. They must have a copy available for inspection at all reasonable times by a resident, prospective resident or a person acting on their behalf.

Operators must also prepare a 3-year report for capital maintenance, extracted from the asset management plan, to inform expenditure for major items of capital in the annual budget.

Exit entitlements, recurrent charges and right of entry

The regulations also affect exit entitlements and recurrent charges. They provide that an operator may enter premises in certain circumstances to facilitate the sale of the premises.

By Lawyers keeps you up to date

The By Lawyers Retirement Villages (NSW) guide has been updated accordingly. The effect of the new regulations is detailed in the commentary. There is also a new precedent ‘Letter to client providing advice on village contract’ which has been added to Folder B on the matter plan. The Retirement Villages (NSW) guide is included in our Conveyancing (NSW) publication.

See our related Obiter post Retirement Villages (NSW) – Amendments concerning the recent amendments to the Act.

Build-to-rent – NSW

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The New South Wales Government has introduced tax concessions for new build-to-rent housing projects. These potentially valuable concessions will remain applicable until 2040.

The term build-to-rent applies to large-scale residential unit developments constructed with the intent of being kept long-term and rented out to lower-income families at affordable prices. The build-to-rent model has been successful overseas and is now being encouraged in New South Wales.

Eligible developments will receive:

  • a 50 per cent reduction in land value for land tax purposes; and
  • an exemption from foreign investor duty and land tax surcharges – or a refund of any surcharges already paid.

The concessions are expected to encourage and support the supply of large-scale rental housing that is professionally owned and managed. The rationale is that such accommodation provides tenants with security of tenure and quality rental services. For a developer to qualify for the scheme, each tenant must be provided with a range of lease term choices, including the option of entering into a fixed term lease of at least 3 years.

These concessions only apply to housing developments that contain at least 50 self-contained dwellings, where construction commenced after 1 July 2020. The dwellings must be used specifically for the purpose of build-to-rent.

See the Treasurer’s guidelines for further information including full eligibility requirements.

The By Lawyers 1001 Conveyancing Answers (NSW) guide has been updated accordingly. This  comprehensive resource is located in the Reference materials folder at the top of the matter plan in every By Lawyers New South Wales conveyancing publication.

Certificates of title – NSW

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The NSW Government has approved the cancellation of all remaining paper certificates of title as part of the implementation of electronic conveyancing. All remaining paper certificates of title are expected to be cancelled in April 2021. Certificates of title will then no longer be evidence of indefeasible title. The By Lawyers Conveyancing and Property guides will be amended accordingly at that point.

Implications

  • For solicitors and conveyancers any lien held over a certificate of title as a form of security for payment of costs will become ineffective.
  • Equitable mortgagees holding certificates of title as security will need to make alternative security arrangements.

Alternative security for professional costs 

  • A solicitor’s lien over all client documents created or obtained in the matter.
  • Creating a charge for the repayment of costs over the client’s real property which entitles the firm to lodge a caveat on title until all costs are paid.
  • Authority to pay professional fees and disbursements from client funds held in the trust account.
  • Guarantee clause for the performance of the agreement by a guarantor, and creating a charge over the guarantor’s real property.

All By Lawyers Costs Agreements provide for these methods of security.

Alternative protection for lenders 

  • Lien over other documents or assets held by the borrower to secure the repayment of the loan.
  • Ensuring that loan agreements contain a right to register a mortgage.
  • Lodging a caveat.

The By Lawyers Mortgages (NSW) Guide contain a ‘Mortgage Linked Loan Agreement’ that is linked to the mortgage and incorporates the provisions found in the By Lawyers ‘Registered Memorandum AJ843928’. A copy of the memorandum of common provisions is recorded at NSW Land Registry Services and can be used at no additional cost by our users.

The By Lawyers Mortgages (NSW) Guide also covers caveats and contains an ‘Acknowledgement of debt – Caveatable Interest’ that creates an interest in the borrower’s real property entitling the lender to register a caveat on the property to secure repayments.

Cancellation of ALL certificates of title

Keep an eye out for the upcoming cancellation of ALL certificates of title, paper and electronic, in NSW. This will see the removal of the requirement to lodge consents and changes to the requirements relating to verification of identity, right to deal and retention of proper evidence.

There will be another Obiter post from By Lawyers when our guides are updated for these developments.

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